News

Sonic: Tough competition, rough weather result in Q1 sales decline

January 8, 2018

Drive-in chain Sonic said that declining first quarter same-store sales for the period ending Nov. 30 reflect growing competition in the QSR market and the effects of bad weather on a brand built around drive-in dining. 

A news release said that a drop in sales was "expected" for the first quarter of the chain's 2018 fiscal year. Other results from the period include: 

• Net income of $11.4 million, compared with $13.1 million in the previous year period.
• A 4 percent increase in net income per diluted share to 29 cents versus 28 cents the previous year.
• A systemwide decline of 1.7 percent in same-store sales. 
• A reduction of 0.1 percent in drive-in margins. 
• The layout of $40.8 million by the company for the repurchase of 1.7 million shares.

"Excluding the impact of weather, same-store sales were flat, indicating an improvement in underlying traffic trends," CEO Cliff Hudson said in the release. "In addition to driving improved traffic, the introduction of a sharper everyday value message also improved value and quality scores from customers, validating our evolution to more focused and consistent national value promotions. ...

"While price competition remains fierce, we are hard at work driving the business in areas we can control. We continue to refine our current media strategies, resulting in increased impressions on national cable today and new creative content in the market this spring. We have growing confidence in our product pipeline as we look out to the key summer season and our mobile order-ahead pilot is underway."

Hudson also said that the company has increased its targeted leverage to a range of 3.5 to 4.5 times net-debt-to-EBITDA. He said the brand expects to end this year at the high end of that range.