After missing the Zacks Consensus Estimate in the last three
) first quarter 2012 loss of 2 cents per share was ahead of the
Zacks Consensus Estimate by a penny. Reported results also improved
from the year-ago loss of 4 cents per share. The
better-than-expected results were driven by strong top-line growth
and margin expansion.
Total revenue, which comprises company-operated restaurant sales
and franchise fees and royalties, grew 4.1% year over year to $24.7
million on higher comparable restaurants sales (comps) and a leap
day in February.
Company-owned sales increased 4.0% to $23.9 million on the back
of comps growth, offset somewhat by a decline in sales due to
closure of units. Franchise fees and royalty revenues increased
6.8% to $0.8 million, benefiting from higher comps.
System-wide comparable store sales grew 7.5% from the year-ago
quarter. Comps improvement was driven by new initiatives and shift
of year-over-year holiday week in the early quarter. Comps at
company-owned restaurants climbed 6.2% thanks to traffic growth of
5.9% and an increase of 0.3% in average check. Comps at franchised
restaurants were considerably up at 9.5%.
Based in Deerfield, Illinois, the company's restaurant operating
loss in the quarter narrowed to $1.1 million from $2.1 million in
the year-ago quarter. The loss contracted due to 120 basis points
(bps) decline in labor and related benefits, as a percentage of
restaurant sales, 140-bp plunge in restaurant operating expenses
partially offset by a 30-bp rise in cost of food and beverage.
During the quarter, the company closed one franchised unit. At
the end of the first quarter, the company had 135 restaurants, out
of which 80 are company-owned and 55 franchised. Cosi did not open
any unit in the reported quarter.
Cosi ended the quarter with cash and cash equivalents of $4.8
million and shareholders' equity of $4.5 million. Additionally, the
company has no debt apart from lease obligation.
Cosi is set to drive its top line by simplifying its menu and
enhancing customer's dinning experience. The company also remains
committed to its cost control initiatives. Moreover, Cosi is taking
a set of initiatives to grow further. We prefer to remain on the
sidelines until those measures translate into better numbers.
Cosi, which competes with companies like
), currently retains a Zacks #4 Rank, which translates into a
short-term Sell rating. We also maintain our long-term Neutral
recommendation on the stock.
COSI INC (COSI): Free Stock Analysis Report
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