Famous Dave's of America Inc.
(
DAVE
) recently reported fourth quarter 2011 adjusted earnings of 9
cents per share, which beat the Zacks Consensus Estimate by a penny
and the prior-year quarter's earnings by 2 cents. Including the
non-cash impairment charges of approximately 4 cents, the earnings
for the reported quarter were 5 cents. In fiscal 2011, earnings
were 72 cents per share versus 67 cents in the prior year.
Famous Dave's, which owns, franchises and operates restaurants
in the U.S., reported total revenue of $37.5 million, up 3.6% year
over year. Company-owned restaurants sales were $33.3 million, up
3.4% year over year. Franchise royalty revenue climbed 7.4% year
over year to $4.0 million. In fiscal 2011, revenue jumped 4.4% to
$154.8 million year over year.
Quarter Highlights
Same-store sales for company-owned restaurants grew 3.6% during
the quarter compared with an upside of 3.3% in the year-ago
quarter.
The upside in comparable sales was attributable to strong sales
promotion and innovative offerings. Same-store sales from
franchise-operated restaurants rose 2.1% versus a decline of 0.8%
in the fourth quarter of 2010.
As a percentage of restaurant sales, both food and beverage
costs and labor and benefit expense spiked 90 basis points (bps) to
30.8% and 32.3%, respectively and operating expense rose 30 bps to
29.4%. However, as a percentage of total revenue, general and
administrative expense dipped 170 bps to 10.5% and depreciation and
amortization expense remained flat year over year at 0.5%. Hence,
the company's operating margin contracted 70 basis points (bps) to
2.1%.
Store Update
During the quarter, the company opened three franchised
restaurants and one company-owned restaurants. At the end of 2011,
the company operated 187 restaurants, including 54 company-owned
restaurants and 133 franchise-operated restaurants.
In 2012, Famous Dave's expects to open up to 15 restaurants, out
of which 10 to 12 are franchise-operated restaurants and 2 to 3 are
company-owned restaurants. The above openings also include first
international location, a restaurant in Winnipeg that is expected
to open in June.
Financial Position
Minnetonka, Minnesota-based company ended 2011 with cash and
cash equivalents of $1.1 million and shareholders' equity of $34.1
million.
During the quarter, the company repurchased 304,036 shares at an
average price of $8.68.
Our Take
As the economy is showing signs of improvement, we believe
Famous Dave's will likely generate improved earnings. In 2012, the
company will focus on four key areas i.e. growth in new restaurants
- both company and franchise, menu, restaurant format, and guest
satisfaction continues evaluation, excellence in core systems and
processes with a focus on continuous improvement and lastly
enhancing shareholder value.
However, increasing input costs, lower consumer spending and
stiff competition from peers like
Jamba, Inc.
(
JMBA
) and
Darden Restaurants, Inc.
(
DRI
) will drag profits.
Famous Dave's currently retains a Zacks #1 Rank, which implies a
short-term Strong Buy rating on the stock. We reiterate our
long-term Neutral recommendation.
FAMOUS DAVES (
DAVE
): Free Stock Analysis Report
DARDEN RESTRNT (
DRI
): Free Stock Analysis Report
JAMBA INC (
JMBA
): Free Stock Analysis Report
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