Cosi Inc.
(
COSI
) reported a loss of 4 cents per share in the fourth quarter of
2011, missing the Zacks Consensus Estimate of a loss of 3 cents.
But the reported figure showed a penny's improvement from the
year-ago loss per share.
Total revenue, which comprises company-operated restaurant sales
and franchise fees and royalties, grew 3.3% year over year to $26.2
million on the increase in company-owned comps as well as one extra
week of operation offset somewhat by a decline in sales due to
closure of units.
Company-owned sales increased 2.8% to $25.3 million. A traffic
growth of 0.6% and an increase of 0.3% in average check resulted in
a 2.8% upside in company-operated restaurant sales. Franchise fees
and royalty revenues increased 18.8% to $0.9 million. In
full-fiscal 2011, revenue declined 6.9% to $102.1
million.
System-wide comparable store sales grew 2.6% from the year-ago
quarter. The upside in comps came after recording decline in comps
for two consecutive quarters. Comps improvement was driven by new
initiatives and favorable weather conditions especially in the
month of December when comps shot up 8.2% owing to the holiday
season. Comps at company-owned restaurants inched up 0.9% following
higher traffic while comps at franchised restaurants were
considerably up at 5.3%.
Based in Deerfield, Illinois, the company's restaurant operating
loss shrunk to $2.3 million from $2.9 million during the quarter.
The loss lessened due to a 40 basis point (bp) decline in labor and
related benefits, as a percentage of restaurant sales, 130-bp
plunge in restaurant operating expenses partially offset by a 30-bp
rise in cost of food and beverage.
Store Update
During the quarter, the company closed two franchised units. At
the end of the fourth quarter, the company had 136 restaurants, out
of which 80 are company-owned and 56 franchised. Cosi did not open
any unit in the fourth quarter.
Financial Position
Cosi ended the quarter with cash and cash equivalents of $7.2
million and shareholders' equity of $5.5 million. Additionally, the
company has no debt apart from lease obligation.
Our Take
Cosi benefited from an enhanced catering menu in the fourth
quarter. Cosi is set to leverage its catering business in 2012 via
an online catering access. Management expects the improving trend
in comps to continue in 2012. Moreover, Cosi is taking a set of
initiatives to walk on the growth path. We prefer to remain on the
sidelines until those measures translate into better numbers.
Cosi, which competes with companies like
Kona Grill Inc.
(
KONA
), currently retains a Zacks #3 Rank, which translates into a
short-term Hold rating.
COSI INC (
COSI
): Free Stock Analysis Report
KONA GRILL INC (
KONA
): Free Stock Analysis Report
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