Denny's Corporation
(
DENN
), engaged in the ownership and operation of a chain of
family-style restaurants, recently announced the preliminary
same-store sales and unit growth results for the upcoming fourth
quarter and fiscal 2011. The same-restaurant sales remained
positive benefiting from higher traffic.
For fourth quarter 2011, the company's system-wide
same-restaurant sales (comps) have upped 1.5% on 1.0% upside in
company-operated units and 1.7% climb in franchised units. This was
a solid improvement compared with the 1.4% decline in overall
same-restaurant sales recorded in the year-earlier quarter. This
represents the third consecutive quarter of positive same-store
sales growth.
For 2011, the Spartanburg, South Carolina-based company has
recorded same-store sales growth of 0.8% at company-owned units,
which is within management's guided range of flatto positive 1% and
achieved 0.6% growth at franchised units, better than management's
forecast of negative 0.5% to positive 0.5%. Thus, system-wide comps
for the fiscal year inched up 0.7%. However, in 2010, the company
witnessed a plunge of 3.7% in system-wide comps due to a dip of
3.6% in company-operated units and 3.7% in franchised units.
The preliminary comps results were quite encouraging,
particularly when consumer spending remains cautious due to
uncertain economic conditions. We believe that Denny's sales and
guest-driving initiatives to attract customers are paying off.
Moreover, Denny's reaffirmed its adjusted EBITDA guidance of $80
million to $83 million and adjusted income before taxes between $36
million and $39 million for 2011.
The company also succeeded in achieving its net unit openings
target for 2011. In 2011, Denny's opened 62 new restaurants, with
54 franchised units and 8 company-owned units. The company also
closed 35 restaurants in the same period. During the fourth
quarter, Denny's purchased 17 company-owned units and opened 8
franchised restaurants.
The Zacks Consensus Estimates for fiscal 2011 and 2012 are
pegged at 32 cents and 40 cents, respectively. The estimates have
not budged in the last 60 days, implying that the analysts expect
the company to report in line results.
Denny's, which competes with
Cracker Barrel Old Country Store, Inc
(
CBRL
) and
DineEquity, Inc
(
DIN
), expects to report fourth quarter 2011 results on February 15,
2012.
Denny's currently retains a Zacks #3 Rank, implying a short-term
Hold rating on the stock. Our long-term recommendation for the
stock remains Neutral.
CRACKER BARREL (
CBRL
): Free Stock Analysis Report
DENNY'S CORP (
DENN
): Free Stock Analysis Report
DINEEQUITY INC (
DIN
): Free Stock Analysis Report
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