SCOTTSDALE Ariz. P.F. Chang’s China Bistro Inc. said Wednesday its first-quarter net income slipped 7.8 percent from a year ago as higher costs offset increased revenue at both its 177-unit namesake chain and its 155-unit Pei Wei Asian Diner fast-casual brand. The company also reported that the pending sale of its lone Taneko Japanese Tavern had fallen through, but did not divulge the reason.
P.F. Chang’s said in January that it had reached an agreement to sell a majority stake in Taneko, a concept patterned after the neighborhood taverns of Japan, to a management-led group that included Food, Friends & Co., the operating company of well-known Texas restaurateur Jack Baum. Today P.F. Chang’s said the parties “did not reach a definitive agreement” and it “continues to actively pursue the sale of Taneko’s long-lived assets during 2008.”
The delay in the sale echoes other slowed deal-making in the industry, as the credit markets have yet to bounce back from stiff contractions that started last summer. Brinker’s sale of Macaroni Grill and Wendy’s decision on a sale or other strategic alternative also have been delayed.
P.F. Chang’s latest-quarter net income dropped to $9.6 million from $10.5 million in the same quarter last year. Earnings per share for the quarter ended March 30 held steady at 40 cents, as the company had 1.8 million fewer shares outstanding this year due to corporate stock buybacks. Higher commodity, labor and rent costs led to a 18.7-percent jump in expenses for the quarter, the company reported. P.F. Chang’s also noted that net income in both this year and last included losses from Taneko and its pending sale.
The results still beat analyst expectations.
Revenue rose 17 percent to $308.6 million. Same-store sales increased 0.1 percent at China Bistro but fell 2.4 percent at Pei Wei.
Rick Federico, chief executive of P.F. Chang’s, said revenues “surpassed our expectations,” but he added that consumers are expected to “remain under economic pressure for the rest of the year.”
The higher-than-anticipated revenue growth led the company to increase by 2 cents per share its earnings expectations for the full year. P.F. Chang’s now expects to earn between $1.34 per share and $1.40 per share. A year ago the company earned $1.36 per share.
