BJ's Restaurants Q4 Earnings & Rev In Line - Analyst Blog

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Restaurateur BJ's Restaurants Inc. 's ( BJRI ) 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 $200.0 million.

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 promotional activity.

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.

Store Update

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 years.

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.

Full-Year Update

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%.

Our Take

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. ( DAVE ), Fiesta Restaurant Group, Inc. ( FRGI ), and Brinker International, Inc. ( EAT ). 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).



BJ'S RESTAURANT (BJRI): Free Stock Analysis Report

FAMOUS DAVES (DAVE): Free Stock Analysis Report

BRINKER INTL (EAT): Free Stock Analysis Report

FIESTA RESTRNT (FRGI): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Business , Earnings , Stocks

Referenced Stocks: BJRI , DAVE , EAT , FRGI

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