CKE Restaurants Inc. swung to a loss in its first quarter from a year-ago profit, as sales slid at the Carl’s Jr. and Hardee’s quick-service chains, operating and labor costs rose, and $20.9 million in costs surrounding its proposed acquisition were booked.
A week before the company’s shareholders are scheduled to vote on a pending buyout offer from Apollo Management, CKE Restaurants reported a net loss of $3.1 million, or 6 cents per share, for the first quarter ended May 17. In the same quarter a year earlier, CKE earned a profit of $14.4 million, or 26 cents per share.
First-quarter revenue fell 2.6 percent to $435.2 million.
The transaction fees booked in the latest quarter included a termination fee to previous bidder Thomas H. Lee Partners, which eventually was outbid by Apollo. In April, CKE accepted a buyout deal valued at $1 billion from Apollo, which included a cash offer of $12.55 per share and the refinancing of CKE’s debt. Shareholders are scheduled to vote on the deal on June 30, CKE said, and if approved the deal is expected to close by July 7.
First-quarter blended same-store sales for corporate units of Hardee’s and Carl’s Jr. fell 3.9 percent. Same-store sales at corporate Carl’s Jr. locations fell 6.1 percent, which the company said was a result of the weak economy in California, that brand’s core market.
Corporate Hardee’s locations, which are primarily located in the Midwest and Southeast, reported a same-store sales slide of 1.2 percent for the quarter, which officials also blamed on weak economic conditions.
Andrew Puzder, CKE’s chief executive, said, “In our first quarter, the U.S. economic downturn and particularly high unemployment rates in California and among our core target audience of young men, continued to impact same-store sales at Carl’s Jr. and Hardee’s.”
Puzder noted that same-store sales at Hardee’s have been positive during the past nine weeks and trends also have improved for Carl’s Jr.
Based in Carpinteria, Calif., CKE Restaurants operates, franchises or licenses 3,146 restaurants in 42 states and 16 countries, including 1,233 Carl’s Jr. and 1,901 Hardee’s.
Contact Lisa Jennings at [email protected].