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

NASHVILLE, Tenn.--()--J. Alexander’s Corporation (NASDAQ: JAX) reported operating results for the second quarter and first half of fiscal 2010 ended July 4, 2010.

“In a still uncertain economy, we believe our sales performance and increases in guest counts indicate that our guests continue to appreciate the quality and service J. Alexander’s offers”

Commenting on results for the second quarter of 2010, Lonnie J. Stout II, Chairman, President and CEO, said, “We are pleased with the continued upward trend in same store sales which was responsible for much of the improvement in our performance. Our sales gains were somewhat ahead of our expectations and were broad-based with most of our restaurants posting increases. We are encouraged with these results, but very mindful that we still have a way to go before returning to our pre-recession sales and profit levels.”

For the second quarter of 2010, J. Alexander’s Corporation recorded average weekly same store sales per restaurant of $84,700, up from $80,900 in the corresponding quarter a year earlier. The Company’s average weekly sales per restaurant for the second period of 2010 were $84,800, an increase from $80,900 achieved in the second quarter of 2009. Same store sales calculations are based on 32 restaurants open for more than 18 months.

J. Alexander’s Corporation reported an increase of 2.6% 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 2.2% to approximately $25.00. The effect of menu price increases for the quarter just ended was approximately 1.3% compared to the same period a year earlier.

“In a still uncertain economy, we believe our sales performance and increases in guest counts indicate that our guests continue to appreciate the quality and service J. Alexander’s offers,” Stout observed.

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 second quarter of the current year. Total labor and related costs decreased from 35.5% of net sales to 34.5% of net sales. Other restaurant operating expenses decreased to 22.5% of net sales from 23.5% of net sales. Depreciation and amortization of restaurant property and equipment decreased to 4.1% of net sales for the second quarter of 2010 from 4.8% for the second quarter of 2009 because asset impairment charges recorded at the end of 2009 significantly lowered the depreciable basis for the assets of two restaurants and because of the increase in same store sales.

Cost of sales for the second quarter of 2010 increased to 32.4% of net sales from 31.2% of net sales in the corresponding quarter of the previous year.

“Our cost of sales climbed in the second quarter of 2010 largely due to higher prices paid by the Company for beef and certain other food commodities,” Stout pointed out. “This took our cost of sales above our targeted level and we are implementing some very modest menu price increases to offset some of these higher food costs.”

For the second quarter of 2010, J. Alexander’s Corporation’s restaurant operating margins (net sales minus total restaurant operating expenses divided by net sales) increased to 6.6% from 5.1% in the same period of 2009.

General and administrative expenses for the second quarter of 2010 decreased by approximately $450,000, or 16.5%, largely due to charges included in the second quarter of 2009 related to litigation pending at that time. Stout added that the Company had done a good job of managing other general and administrative expenses as well and that expenses were down versus the prior year quarter in most categories.

For the first six months of 2010, J. Alexander's Corporation recorded net sales of $75,061,000, up from $72,775,000 reported in the first two quarters of 2009. The Company recorded net income of $823,000, or $.14 per diluted share, compared to a net loss of $344,000, or $.05 per share, posted in the comparable two periods of 2009.

J. Alexander's Corporation had average weekly same store sales per restaurant of $88,000 in the first six months of 2010, up 3.2% from $85,300 recorded in the first two quarters of 2009. The Company’s average weekly sales per restaurant for the first two periods of 2010 were $87,500, up 3.2% from $84,800 reported in the corresponding period of 2009.

The Company’s average guest counts for the first six months of 2010 increased 1.9% on a same store basis from the comparable six months of 2009. The average guest check, including alcoholic beverage sales, increased 1.5% to $25.13. The effect of menu price increases for the first two quarters of 2010 was approximately 0.9% compared to the same period of the prior year.

Total cost of sales for the first six months of 2010 was 31.9%, up from 31.3% in the comparable six month period of 2009. Restaurant labor and related costs for the first two quarters of the current year decreased to 33.8% of net sales from 34.4% of net sales in the same two periods of 2009, and other restaurant operating expenses decreased to 22.1% of net sales for the first half of 2010 compared to 22.8% for the first half of 2009. For the first six months of 2010, J. Alexander's Corporation had restaurant operating margins of 8.1%, up from 6.9% in the first two quarters of 2009.

Stout said that the outlook for the balance of the year is generally favorable, but with questions remaining about the strength of the recovery and consumer confidence.

“We are seeing signs of recovery in the upscale segment of the restaurant industry. Our goal is to make sure we have our fair share of the business.

“Our outlook is considerably brighter than at this point a year ago. We enter the final half of 2010 with a very positive pace of sales momentum. We are confident in our ability to continue to improve the performance of our restaurants even in a fragile economic recovery.”

J. Alexander’s Corporation operates 33 J. Alexander’s restaurant in thirteen states.

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

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