Sbarro, Inc. Announces Results of Operations for the Second Quarter and Six Months Ended June 27, 2010

Sbarro, Inc. (the “Company”) announced results of operations for the second quarter and six months ended June 27, 2010. The Company’s detailed results are included in its Quarterly Report on Form 10-Q, which was filed with the SEC on August 11, 2010.

“Our results for the second quarter of 2010 continued to be impacted by the general economic slowdown still present in our operating environment. We are focusing on top line performance to strengthen results in the months ahead while continuing to balance our cost control initiatives.”

Revenues were $76.1 million for the quarter ended June 27, 2010 as compared to revenues of $80.1 million for the quarter ended June 28, 2009. The decrease in sales is due to a decrease in comparable-unit sales of $4.5 million or 6.2% in our QSR restaurants and lost sales from stores strategically closed of $1.4 million, partially offset by sales generated by new stores opened, remodeled or relocated in 2010 and 2009 of $1.9 million. Domestic franchise restaurants performed better than company-owned restaurants with a comparable-unit sales decline of 0.9%, mainly due to shifts in the university semesters as compared to the prior year. The decrease in company-owned and domestic franchise comparable-unit sales primarily reflects continued reduced consumer spending throughout the United States as a result of the current economic environment. Without consideration for foreign currency fluctuations, international franchise comparable-unit sales increased 4.1%. The valuation of the U.S. Dollar relative to foreign currencies added an additional 3.9% increase in international franchise comparable-unit sales.

EBITDA, as calculated in accordance with the terms of the Company’s bank credit agreements, was $6.3 million for the quarter ended June 27, 2010 as compared to $8.2 million for the quarter ended June 28, 2009. The decline was primarily the result of the decline in company-owned comparable-unit sales and an increase in commodity costs during the quarter, specifically cheese, partially offset by payroll and other cost savings initiatives.

As discussed in Exhibit A, EBITDA is a non-GAAP financial measure that management believes is an important metric for us to report to our investors, as we consider it a helpful additional indicator of our ability to meet future debt obligations and to comply with certain covenants in our borrowing agreements which are tied to this metric. Exhibit A includes a reconciliation of EBITDA to net loss, which is the most directly comparable financial measure under United States Generally Accepted Accounting Principles (“GAAP”). Exhibit A also identifies adjustments to EBITDA that are provided for under the Company’s bank credit agreements.

Year to Date Financial Results

Revenues were $155.1 million for the six months ended June 27, 2010 as compared to revenues of $159.7 million for the six months ended June 28, 2009. The decrease in sales is due to a decrease in comparable-unit sales of $5.4 million or 3.7% in our QSR restaurants and lost sales from stores strategically closed of $3.6 million, partially offset by sales generated by new stores opened, remodeled or relocated in 2010 and 2009 of $3.9 million. Domestic franchise comparable-unit sales declined 3.0%. The decrease in company-owned and domestic franchise comparable-unit sales primarily reflects continued reduced consumer spending throughout the United States as a result of the current economic environment. Without consideration for foreign currency fluctuations, international franchise comparable-unit sales increased 5.8%. The valuation of the U.S. Dollar relative to foreign currencies added an additional 7.0% increase in international franchise comparable-unit sales.

EBITDA, as calculated in accordance with the terms of the Company’s bank credit agreements, was $14.3 million for the six months ended June 27, 2010 as compared to $17.3 million for the six months ended June 28, 2009. The decline was primarily the result of the decline in company-owned comparable-unit sales and an increase in commodity costs, specifically cheese, partially offset by cost savings initiatives.

The Company was in compliance with all covenants as calculated in accordance with the terms of the Company’s bank credit agreement at June 27, 2010.

Nicholas McGrane, Interim President and Chief Executive Officer of Sbarro, Inc. commented, “Our results for the second quarter of 2010 continued to be impacted by the general economic slowdown still present in our operating environment. We are focusing on top line performance to strengthen results in the months ahead while continuing to balance our cost control initiatives.”

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