BJ's Restaurants Inc.
) fourth-quarter 2013 adjusted earnings of 6 cents per share were
down 77.7% year over year due to higher cost and expenses.
However, earnings were in line with the Zacks Consensus Estimate
which we believe was due to a decent top line.
Behind the Headlines
Revenues in the reported quarter grew 8.0% year over year to
$199.8 million driven by a 12% increase in operating weeks.
Revenues were almost in line with the Zacks Consensus Estimate of
Comparable restaurant sales declined 2.7% versus an increase of
3.0% in the prior-year quarter and worse than a decline of 2.2%
in the previous quarter. The significant decline reflects a 2.3%
reduction in guest traffic which reflects a shortened holiday
shopping season and the impact of a severe winter. The decline in
comps also reflect decrease in average guest check of
approximately 0.4% due to increased discounting and higher
Operating margin was down 380 basis points (bps) year over year
to 0.9%, reflecting a spike in the overall cost structure. Labor
costs were up 14.1% year over year while occupancy and operating
costs increased 16.3% year over year.
As of Dec 31, 2013, the company had 147 restaurants. During 2013,
the company opened 17 new restaurants, out of which 6 were opened
during the fourth quarter.
The company plans to open 425 more BJ's restaurants domestically
and therefore intends to open more units in Florida and Texas.
During 2013, the company opened new restaurants in the
Mid-Atlantic region in Virginia and Maryland and plans to open
more outlets in these underserved markets over the next several
More importantly, a large number of the company's openings in
2014 will be based on its new 7,400 square foot prototype, which
is expected to cost approximately $1.0 million less than the
current prototype while maintaining the same productivity levels.
This will allow it to increase returns on invested capital.
In full year 2013, BJ's adjusted earnings per share were 85
cents, down 24.0% year over year. However, it beat the Zacks
Consensus Estimate of 78 cents by 9.0%. Revenues grew 9.4% year
over year to $775.1 million, but marginally missed the Zacks
Consensus Estimate of $776.0 million by 0.1%.
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BJ's earnings and revenues in the fourth quarter of 2013 came in
line with the Zacks Consensus Estimate, after missing the same in
the rest of 2013. However, a significant year-over-year decline
in earnings keeps us cautious. Deteriorating comps and a decline
in guest traffic are also concerns.
BJ's Restaurants currently has a Zacks Rank #5 (Strong Sell).
Some better-ranked stocks in the restaurant industry include
Famous Dave's of America Inc.
Fiesta Restaurant Group, Inc.
Brinker International, Inc.
). While Famous Dave's of America and Fiesta Restaurant Group
sport a Zacks Rank #1 (Strong Buy), Brinker International holds a
Zacks Rank #2 (Buy).