News
Cost control nets Burger King Q3 15% profit
April 28, 2009
MIAMI — Burger King Holdings Inc. has reported its 21st consecutive quarter of worldwide positive comparable sales for the third quarter ended March 31, the company has announced.
Worldwide comps for the quarter were up 1.0 percent despite a one point negative calendar shift due to last year being a leap year. U.S. and Canada comps were up 1.6 percent, the 20th consecutive quarter of positive comps.
Comparable sales were driven by a combination of indulgent and value offerings, including the successful multi-market promotion of the Angry Whopper sandwich in January and the U.S. launch of BK Burger Shots and BK Breakfast Shots in February.During the quarter, the company also benefited from a significant sales increase in the late night daypart as a result of the North America competitive hours initiative.
Worldwide comparable sales rapidly declined in March, driven by the current sales environment and the shift of the Easter holiday to the fourth quarter of 2009, with Germany and Mexico markets most affected.
Revenues for the quarter were up 1.0 percent to $600 million, compared to $594 million in the same quarter last year. Year to date, revenues were up 5 percent to $1.9 billion, compared to $1.8 billion last year.
Revenues were unfavorably impacted by $44 million due to fluctuations in currency exchange rates.
Net income for the quarter was $47 million, up 15 percent compared to $41 million in the same period last year. Year-to-date, net income was $141 million, up 1.0 percent compared to $139 million last year.
"While we performed well in January and February, the unexpected decline in March traffic across many of the countries in which we operate, particularly the Germany and Mexico markets, adversely affected our results," said John Chidsey, chairman and chief executive officer, Burger King Corp. "Although disappointed in our company restaurant margins, we are pleased to have been able to offset the earnings impact with continued revenue growth, general and administrative cost reductions, lower interest expense and tax savings. I am also pleased with how the team rapidly readjusted our marketing efforts toward more value focused promotions and menu offerings."
Looking ahead
The company's fiscal 2009 fourth quarter marketing calendar includes:
- Promotional movie tie-ins with the summer releases of expected blockbusters Star Trek and Transformers
- Superfamily promotions tieing a 99-cent BK Kids Meal deal in conjunction with SpongeBob SquarePants and Pokemon
- Continued promotion of late night, capitalizing on the daypart's continued positive momentum
Product launches include the Tendercrisp Bacon Cheddar Ranch limited-time-offer chicken sandwich and the rollout of the Steakhouse XT, an extra-thick juicy burger, to approximately 40 percent of U.S. designated marketing areas that have installed the new batch broiler.
The company's results are expected to benefit from its extensive marketing calendar, value-focused marketing initiatives, net restaurant openings and lower food and energy costs in the United States. However, the company is forecasting continued earnings pressures in its fiscal fourth quarter due to persisting macroeconomic uncertainties and an increased competitive landscape, according to a news release.
"We continue to grow our top-line in this challenging economic environment with positive April comps and are tactically responding to ever-changing market dynamics. However, due to ongoing market challenges and unknown potential effects of the Swine Flu situation, we are taking a more conservative outlook to our fourth quarter fiscal year 2009 earnings estimate," Chidsey said.
A replay of the company's earnings call webcast will be available for for one month via the company's investor relations Web site atinvestor.bk.com.
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