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J. Alexander’s Corporation Reports Results for First Quarter of 2010 Fiscal Year

2010-05-03

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J. Alexanders Net sales increased 1.7% to $38,725,000 from $38,065,000 - Average weekly same store sales per restaurant increased by 1.7%.

J. Alexander’s Corporation (NASDAQ: JAX) today reported operating results for the first quarter ended April 4, 2010.

“I believe restaurants in our industry segment will be among the first to recover”

A summary of the first quarter of 2010 compared to the first quarter of 2009, which ended on March 29, 2009, follows:

Net sales increased 1.7% to $38,725,000 from $38,065,000.
Average weekly same store sales per restaurant increased by 1.7%. Because of the Company’s fiscal calendar, the first quarter of 2010 did not include New Year’s Eve, which is typically one of the highest sales days of the year for the Company, whereas the first quarter of 2009 did include New Year’s Eve. Average weekly same store sales per restaurant for the first quarter of 2010 increased by 3.1% when compared to the same 13-week operating period ended on April 5, 2009 which did not include New Year’s Eve.
Income before income taxes was $1,081,000 compared to income before income taxes of $447,000 in the first quarter of 2009.
Income tax expense was $284,000 for the first quarter of 2010 compared to an income tax benefit of $5,000 in the first quarter of 2009.
Net income was $797,000 compared to net income of $452,000 in the first period of 2009, and earnings per diluted share was $.13 compared to $.07 in the first quarter of 2009.

Commenting on results for the first quarter of fiscal 2010, Lonnie J. Stout II, Chairman, President and CEO, said, “While we realize we have a long way to go in order to return to pre-recession performance levels, we are pleased with our progress for the quarter. Much of our performance improvement was related to the upward trend in same store sales. Sales improvements were broad-based with most of our restaurants posting increases. Performance improvements in some of our newer restaurants also contributed to our overall improvement in results, as did lower general and administrative expenses.”

For the first quarter of 2010, J. Alexander’s Corporation recorded average weekly same store sales per restaurant of $91,400, up from $89,900 in the corresponding quarter a year earlier. The Company’s average weekly sales per restaurant for the first period of 2010 were $90,300, an increase from $88,800 achieved in the first quarter of 2009. Same store sales calculations are based on 31 restaurants open for more than 18 months.

J. Alexander’s Corporation reported an increase of 1.5% in average guest counts on a same store sales basis from the comparable period of 2009. The average guest check, including alcoholic beverage sales for the quarter, rose by less than 1% to $25.23 from approximately $25.00. The effect of menu price increases for the quarter just ended was approximately 0.5% compared to the same period a year earlier.

The Company’s increases in same store sales contributed to lower labor and related costs and other restaurant operating expenses as percentages of net sales during the first quarter of the current year. Total labor and related costs decreased from 33.5% of net sales to 33.1% of net sales. Other restaurant operating expenses decreased to 21.8% of net sales from 22.2% of net sales. Depreciation and amortization of restaurant property and equipment decreased to 3.9% of net sales for the first quarter of 2010 from 4.4% for the first quarter of 2009 primarily because asset impairment charges recorded at the end of 2009 significantly lowered the depreciable basis for the assets of two restaurants.

Cost of sales of 31.5% of net sales for the first quarter of 2010 remained generally in line with cost of sales of 31.4% of net sales in the corresponding quarter of the previous year.

For the first quarter of 2010, J. Alexander’s Corporation’s restaurant operating margins (net sales minus total restaurant operating expenses divided by net sales) increased to 9.6% from 8.6% in the same period of 2009.

General and administrative expenses for the first quarter of 2010 decreased by $187,000, or 8.0%, largely as a result of lower training and relocation costs.

Stout said that consumer confidence remains one of the keys to retail and restaurant sales. “The consumer’s assessment of economic conditions has improved since the fourth quarter of 2009. Confidence levels, while higher, are still fragile. We believe further gains in consumer confidence must be realized before a broad economic recovery will occur.

“I believe restaurants in our industry segment will be among the first to recover,” Stout continued. “It is very difficult to forecast the timeliness of the recovery or how robust it will be. However, as the economy improves, I expect J. Alexander’s to earn more than our fair share of increased visitation and new trial by consumers.” Stout said that March was a particularly strong sales month for J. Alexander’s and that positive sales trends are expected to continue in the second quarter.

J. Alexander’s Corporation operates 33 J. Alexander’s restaurants in thirteen states: Alabama, Arizona, Colorado, Florida, Georgia, Illinois, Kansas, Kentucky, Louisiana, Michigan, Ohio, Tennessee and Texas. The Company’s menu features a wide selection of American classics, including steaks, prime rib of beef and fresh seafood, as well as a large assortment of interesting salads, sandwiches and desserts. J. Alexander’s also has a full-service bar that features an outstanding selection of wines by the glass and bottle.

J. Alexander’s Corporation is headquartered in Nashville, Tennessee.


J. Alexander’s Corporation and Subsidiaries
Consolidated Statements of Income
(Unaudited in thousands, except per share amounts)

	Quarter Ended
	April 4			March 29
	2010			2009

Net sales	$	38,725		$	38,065

Costs and expenses:
Cost of sales		12,201			11,953
Restaurant labor and related costs		12,833			12,736
Depreciation and amortization of restaurant property and equipment		1,526			1,668
Other operating expenses		8,456			8,449
Total restaurant operating expenses		35,016			34,806
General and administrative expenses		2,161			2,348
Operating income		1,548			911
Other income (expense):
Interest expense		(486	)		(479	)
Other, net		19			15
Total other expense		(467	)		(464	)
Income before income taxes		1,081			447
Income tax (provision) benefit		(284	)		5
Net income	$	797		$	452

Earnings per share:
Basic earnings per share	$	.13		$	.07
Diluted earnings per share	$	.13		$	.07

Weighted average number of shares:
Basic earnings per share		5,947			6,755
Diluted earnings per share		5,964			6,759


J. Alexander’s Corporation and Subsidiaries
Consolidated Statements of Income
Percentages of Net Sales (Unaudited)

	Quarter Ended
	April 4			March 29
	2010			2009

Net sales		100.0	%		100.0	%
Costs and expenses:
Cost of sales		31.5			31.4
Restaurant labor and related costs		33.1			33.5
Depreciation and amortization of restaurant property and equipment		3.9			4.4
Other operating expenses		21.8			22.2
Total restaurant operating expenses		90.4			91.4
General and administrative expenses		5.6			6.2
Operating income		4.0			2.4
Other income (expense):
Interest expense		(1.3	)		(1.3	)
Other, net		-			-
Total other expense		(1.2	)		(1.2	)
Income before income taxes		2.8			1.2
Income tax (provision) benefit		(0.7	)		-
Net income		2.1	%		1.2	%

Note: Certain percentage totals do not sum due to rounding.

Average Weekly Sales Information (1):

Average weekly sales per restaurant	$	90,300		$	88,800
Percent increase		1.7	%

Same store weekly sales per restaurant	$	91,400		$	89,900
Percent increase		1.7	%

(1) Includes the thirty-one restaurants open for more than eighteen months.


J. Alexander's Corporation and Subsidiaries Condensed Consolidated Balance Sheets (Unaudited in thousands)

	April 4		January 3
	2010		2010
ASSETS

Current Assets
Cash and cash equivalents	$	5,232	$	5,613
Other current assets		5,374		6,202
Total current assets		10,606		11,815

Other assets		1,692		1,601
Property and equipment, net		76,903		77,914
Deferred income taxes		152		152
Deferred Charges, net		634		659
	$	89,987	$	92,141

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities	$	12,347	$	15,194
Long-term debt and capital lease obligations		21,372		21,796
Other long-term liabilities		10,104		9,903
Stockholders’ equity		46,164		45,248
	$	89,987	$	92,141