Bob Evans Farms Inc. ( BOBE ) has recently
announced third quarter fiscal 2013 adjusted earnings of 56 cents
per share, missing the Zacks Consensus Estimate by a penny and the
year-ago earnings of 69 cents per share. On a reported basis,
earnings were 20 cents in the quarter versus 69 cents recorded a
Columbus, Ohio-based Bob Evans declared that it has completed
the sale of its Mimi's Cafe restaurant segment on Feb 15, 2013.
The company posted adjusted net sales of $434.4 million which
fell short of the Zacks Consensus Estimate of $436.0 million but up
from the year-ago quarter's sales of $428.3 million. The sales in
the quarter were driven by the sales growth at the BEF Foods
segment and comparable sales (comps) as well as unit growth at Bob
Evans Restaurants. However, revenues were partially hurt by lower
comps at Mimi's Cafe's.
Inside the Headlines Numbers
In third quarter of fiscal 2013, segment wise, net sales at Bob
Evans Restaurant were up 1.3% at $245.5 million while sales at
Mimi's Café recorded an even steeper decline of 4.0% to $91.1
million. BEF Food segment's net sales surged the most by 7.5% to
Cost of sales fell 110 basis points (bps) from the year-ago
quarter to 31.0% due to cost saving initiatives. Other operating
expenses expanded 20 bps to 16.5%. Selling general and
administrative expense increased 140 bps to 10% and operating wages
increased 40 bps to 31.6%.
Consolidated operating margin dropped 150 bps to 7.1% owing to
lower comps generated at Mimi's Café, sales de-leverage and higher
costs at Bob Evans Restaurants coupled with the change in the
timing of the marketing expenses at BEF Foods. Adjusted operating
income of Bob Evans fell 19.6% year over year to $24.5 million.
During the reported quarter, the company revamped 40 Bob Evans
restaurants. Thus, at the end of the quarter, the company operated
565 Bob Evans restaurants and 145 Mimi's Cafe restaurants.
At the end of the quarter, cash and cash equivalents were $4.4
million and stockholders' equity was $635.8 million.
During the third quarter, the chain bought back 224,821 shares
worth $8.9 million.
For the fourth quarter of fiscal 2013, the company expects that
earnings per share will lie within the range of 60 cents and 65
cents (excluding the operating results of Mimi's Café).
The company is now operating under two segments, Bob Evans
Restaurant and BEF Food. The company now expects that same-store
sales at Bob Evans restaurants will grow flat to 1% whereas
operating margin will be within 9% to 9.5% in the fourth quarter.
Net sales at the BEF Foods segment are projected in the range of
$80 million to $90 million with operating margin within the range
of 9.5% to 10.5%.
For fiscal 2013, Bob Evans Farms reduced its revenue guidance to
$1.6 billion from $1.7 billion. The company plans $130-$150 million
of capital expenditure in 2013. In long-term, the company is on the
right track to augment its earnings by 8% -12% annually.
The company's performance at its Bob Evans Restaurant segment
and its cost saving efforts are commendable. Moreover, recent
selling of Mimi's Cafes should give a boost to the company's
business. This divesture will help Bob Evan to concentrate on its
better-performing namesake brands -- Bob Evans Restaurant and Bob
Evans Foods segments. Recently, the company also revealed its plan
to close two Foods production plants in the second quarter of
fiscal 2014 which will augur well for its earnings.
However, the company is wary of its competitors due to an
intensive promotional environment.
Bob Evans retains a Zacks Rank #3 (Hold). Another restaurateur
AFC Enterprises Inc. ( AFCE ) recently
declared its preliminary fourth quarter and full year 2012 results.
The company projects its adjusted earnings per share for the full
year of 2012 to be within $1.23-$1.24, up from 99 cents in 2011.
AFC also provided an optimistic outlook for 2013. AFC currently
holds a Zacks Rank #2 (Buy).
Other restaurateurs, which are expected to perform well moving
ahead, include Krispy Kreme Doughnuts, Inc. ( KKD ) and
Burger King Worldwide, Inc. ( BKW ). Both carry a
Zacks Rank #2 (Buy).AFC ENTERPRISES (AFCE): Free Stock Analysis
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