Luby's Announces Third Quarter Fiscal 2009 Results

Luby's, Inc. (NYSE:LUB) today announced unaudited financial results for the third quarter of fiscal 2009, a twelve-week period, which ended on May 6, 2009.

Third Quarter Highlights:

* Restaurant sales were $66.0 million, a decrease of $6.7 million compared to the same quarter last year; approximately $1.5 million of the reduction in sales related to closed operations partially offset by new restaurant sales.
* Culinary contract services revenue increased to $3.0 million in the third quarter compared to $1.8 million in the same quarter last year. The increase was due to culinary contract services operating 13 facilities as of May 6, 2009 compared to operating 9 facilities as of May 7, 2008.
* Restaurant sales declined $6.7 million in the third quarter but store level profit declined only $1.4 million due to effective cost management. The Company defines store level profit as restaurant sales minus costs of food, payroll and related costs and other operating expenses.
* Same-store sales, which consisted of 118 restaurants, decreased approximately 8.9% due primarily to declines in guest traffic partially offset by higher menu prices. The third quarter fiscal 2009 partially benefited from the favorable timing of Lent in the third quarter. Adjusted for this item, the Company estimated same-store sales declined approximately 9.4% in the third quarter fiscal 2009.


a) The first quarter fiscal 2009 was adversely affected by the unfavorable timing of Thanksgiving, which occurred after quarter-end, and by the closure of stores related to Hurricane Ike.
b) The second quarter fiscal 2009 benefited from the favorable timing of Thanksgiving at the beginning of the quarter and, to a lesser extent, was adversely affected by the unfavorable timing of Lent, which began after quarter-end.
c) The third quarter fiscal 2009 partially benefited from the favorable timing of Lent.
d) Includes all footnotes.

Total sales decreased 7.5% in the third quarter fiscal 2009 to $69.0 million, compared to $74.6 million in the same quarter last year. Culinary contract services sales were $3.0 million in the third quarter compared to $1.8 million in the same quarter last year. Restaurant sales in the third quarter were $66.0 million compared to $72.7 million in the same quarter last year. The $6.7 million decline in restaurant sales included a $1.5 million reduction in sales related to closed operations partially offset by new restaurant sales.

The Company reported a loss from continuing operations in the third quarter of $1.0 million, or $0.04 per diluted share, compared to income from continuing operations of $1.0 million, or $0.03 per diluted share in the same quarter last year. Included in the loss from continuing operations this year are the after tax impact of the following items; 1) approximately $0.02 per diluted share due to an impairment charge for the decrease in fair value investment and 2) approximately $0.01 per diluted share net gain on disposition of property and equipment primarily due to insurance proceeds associated with an insurance settlement related to Hurricane Ike.

'In the third quarter we experienced a continuation of the macro-economic environment pressure and its affect on customer frequency and sales. However, our team controlled costs well in the quarter to preserve store level margins,' said Chris Pappas, President and CEO. 'We remain committed to developing and introducing offerings and price points aimed to increase customer frequency with the long-term goal of growing profitability and cash flow from operations at our existing restaurants.'

Food costs decreased approximately $1.9 million in the third quarter fiscal 2009 compared to the same quarter last year due to lower sales volume. Food costs as a percentage of restaurant sales decreased to 27.3% in the third quarter fiscal 2009 from 27.4% in the third quarter last year primarily due to lower commodity costs, offset by higher menu prices.

Payroll and related costs decreased $1.2 million in the third quarter fiscal 2009 compared to the same quarter last year due to lower crew overtime and lower management costs offset by higher average wages paid to crew employees. Payroll and related costs as a percentage of restaurant sales increased to 36.5% in the third quarter fiscal 2009 from 34.8% in the same quarter last year, primarily due to reduced restaurant sales.

Other operating expenses primarily include restaurant-related expenses for utilities, repairs and maintenance, advertising, insurance, supplies, services and occupancy costs. Other operating expenses decreased by approximately $2.2 million compared to the same quarter last year. As a percentage of restaurant sales, other operating expenses decreased to 22.6% compared to 23.5% in the same quarter last year. Other operating expenses decreased primarily due to 1) an approximate $0.7 million reduction in repairs and maintenance expense related to improvements in cost controls, 2) an approximate $0.8 million, net decrease in restaurant supplies, services and other operating expenses on reduced restaurant sales, and 3) an approximate $0.7 million reduction in utility expense.

Depreciation and amortization expense increased approximately $0.3 million in the third quarter fiscal 2009 compared to the same quarter last year due to higher depreciable asset base generated by increased capital expenditures in fiscal 2008, including the opening of three restaurants, as well as upgrades and remodels to existing units.

General and administrative expenses include corporate salaries and benefits related costs, including restaurant area leaders, share-based compensation, professional fees, travel and recruiting expenses and other office expenses. General and administrative expenses increased by approximately $0.2 million in the third quarter fiscal 2009 compared to the same quarter last year. As a percentage of total sales, general and administrative expenses increased to 8.6% in the third quarter compared to 7.7% in the same quarter last year. The increase was due to approximately $0.3 million in professional fees primarily related to the defense of pending claims and $0.1 million in severance expense.

Logos, product and company names mentioned are the property of their respective owners.

Reader Comments:

Be the first to leave a comment for this article

Tweet