News

Q3 results 'below our expectations' for Jack in the Box Inc.

August 14, 2017

Leadership at QSR brand Jack In The Box Inc. says that although the company's Q3 financials were disappointing, the company's refranchising program is making solid progress. Withe the quarter ending July 9, the company updated guidance for its fiscal year and declared a quarterly cash dividend of 40 cents per share of common stock, to be paid Sept. 5, a news release said.

Other key financial results from the quarter include: 

• earnings from continuing operations of $37.1 million, or $1.25 per diluted share, compared with $30.8 million, or 93 cents per diluted share, for the third quarter of fiscal 2016;
• operating earnings per share of 99 cents in the third quarter of fiscal 2017 compared with $1.07 in the prior year quarter;
• restructuring charges of $1.8 million, or approximately 4 cents per diluted share; and
• 31 franchised Jack in the Box restaurants taken over from underperforming franchisee, $4.4 million, or approximately 10 cents per diluted share.

"While same-store sales for both brands improved sequentially, our third-quarter performance was below our expectations," Jack in the Box Chairman and CEO Lenny Comma, said in the release. "Jack in the Box same-store sales and transactions improved as we focused more of our advertising on value messages, but company restaurant margins were negatively impacted by higher labor and repairs and maintenance costs, and the return of commodity inflation. 

"System same-store sales at Qdoba restaurants turned positive in the quarter, as guests responded favorably to menu innovation. ... Company restaurant margins at Qdoba improved sequentially to over 16 percent in the quarter as we were able to manage labor costs more effectively."

Comma reported continued progress in the Jack in the Box refranchising initiative, including 58 restaurants sold in Q3 for a total year year-to-date of 118. He said that by the quarter's end, the brand also signed nonbinding letters of intent with franchisees to sell 63 additional restaurants.

For the fourth quarter, the company sees same-stores sales from flat to 2 percent lower at both Jack in the Box and Qdoba. Full-year 2017 same-store sales are expected to grow 0.5 percent at Jack In Box System restaurants, while Qdoba is expected to post a 2.0 to 2.5 percent drop in same-store sales.