Famous Dave's of America Inc.
) recently reported fourth quarter 2012 earnings of 10 cents per
share, which beat the Zacks Consensus Estimate by a penny and the
prior-year quarter's earnings by 5 cents (tax rate adjustment of
4 cents is included).
In fiscal 2012, earnings were 57 cents per share (including 4
cents of non-cash charges), in line with the Zacks Consensus
Estimate, but down from the year-ago earnings of 68 cents per
share. Diluted adjusted earnings were 61 cents per share in 2012
compared with 73 cents in 2011.
The challenging economic environment, increased commodity
prices and highly competitive industry are perceived to be the
reasons for the company's weak performance in 2012.
In the fourth quarter, Famous Dave's, which owns, franchises
and operates restaurants in the U.S., reported total revenues of
$36.3 million, down 3.2% year over year and missed the Zacks
Consensus Estimate of $37 million. In fiscal 2012, revenues were
up slightly by 0.1% to $155 million year over year.
During the quarter, Company-Owned restaurants sales were $31.8
million, down 4.6% year over year. Sales at the
Franchise-Operated restaurants were $82.6 million, down 1.2% year
Franchise royalty revenues remained flat year over year to
$4.0 million, owing to a 4% decline in comparable sales. The
opening of two franchise units also negatively impacted the
company's franchise royalty revenues.
Same-store sales for Company-Owned restaurants were down 6%
during the quarter compared with an upside of 3.6% in the
year-ago quarter. Same-store sales from franchise-operated
restaurants witnessed a decline of 4.0% versus a rise of 2.1% in
the fourth quarter of 2011.
As a percentage of restaurant sales, food and beverage costs
and labor and benefit expense went up 70 basis points (bps) and
100 bps to 31.5% and 33.3%, respectively, whereas operating
expense declined 200 bps to 27.4%. As a percentage of total
revenue, general and administrative expense surged 140 bps to
11.9% and depreciation and amortization expense remained flat
year over year at 0.5%. Hence, the company's operating margin
spiked 10 basis points (bps) to 2.2%.
During the quarter, the company launched four franchised
restaurants and one Company-Owned restaurant. Moreover, the
company has also shut down a Company-Owned and three franchised
At the end of 2012, the company operated 188 restaurants,
including 53 company-owned restaurants and 135 franchise-operated
restaurants across 34 states in the U.S. and 1 province in
Canada. Further, a unit, which was closed in 2012, is likely to
be replaced in 2013.
The restaurant ended 2012 with cash and cash equivalents of
$2.1 million and shareholders' equity of $33.8 million.
Although the company did not buy back any shares in the fourth
quarter, it repurchased 539,596 shares worth nearly $5.9 million
in the full year of 2012.
In 2013, Famous Dave's expects to launch new restaurants in 17
places of which one will be PuertoRico; thus marking the
company's first opening in the region. With these openings, the
company will cross the 200 restaurant milestone and sales of half
Going forward, the company is likely to enhance its menu
offering through proper pricing and investments strategy. The
company also plans to venture into new places and ink new
The company's initiative to focus on key areas ranging from
company and franchise units, menu as well as restaurant format,
continuous augmentation of guest satisfaction, excellence in core
systems to cost saving strategy is impressive.
However, annual decline in the earnings reflect the negative
impact from the prevailing weak economic condition. Further, we
are concerned with the growing food prices including higher beef
costs, which may adversely affect the company's financial
performance, going forward.
Famous Dave's currently retains a Zacks Rank #3 (Hold).
AFC Enterprises Inc.
) 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
Krispy Kreme Doughnuts, Inc.
Burger King Worldwide, Inc.
), both carry a Zacks Rank #2 (Buy), respectively.
AFC ENTERPRISES (AFCE): Free Stock Analysis
BURGER KING WWD (BKW): Free Stock Analysis
FAMOUS DAVES (DAVE): Free Stock Analysis
KRISPY KREME (KKD): Free Stock Analysis
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