Denny’s Corp. reported Wednesday an increase in net income for the fourth quarter, but attributed most of that gain to provisions for a tax benefit and impairment expense.
Systemwide same-store sales rose 0.7 percent for fiscal 2011 ended Dec. 28, compared with a 3.6-percent drop a year earlier — the first time since 2007 that that both company-operated and franchised locations simultaneously registered growth in that metric, the operator and franchisor of Denny’s family-dining restaurants said.
Net income for the fourth quarter ended Dec. 28 was $92 million, or 94 cents per share, compared with $2.7 million, or 3 cents per share, in 2010’s fourth quarter.
The company said $89 million of that gain came from a tax benefit from the release of a valuation allowance on certain deferred tax assets, and $1.8 million in impairment expense.
On a year-over-year basis, fourth-quarter revenue dropped 4.2 percent to $130.2 million, as company restaurant same-store sales growth of 1 percent was not sufficient to compensate for slightly lower franchise and licensing revenue and lower company restaurant sales overall, resulting from 26 net fewer company restaurants tied to refranchising and closures.
For the year, net income was $112.3 million, or $1.13 per share, compared with fiscal 2010 earnings of $22.7 million, or 22 cents a share, again benefitting from the $89 million gain from tax benefit and impairment expense, Denny’s said.
Fiscal 2011 revenue decreased 1.8 percent to $538.5 million.
For the fourth quarter, systemwide same-store sales increased 1.6 percent, with a 1.8-percent increase at franchised units and 1-percent improvement at company locations.
Denny’s ended the year with 206 company operated and 1,479 franchised or licensed restaurants for a total of 1,685 units systemwide, which represented growth of 1.6 percent compared with the prior year, the company said.
“In 2011, Denny’s made great progress as we generated positive same-store sales and guest counts overcoming the ongoing challenging consumer economic environment,” John Miller, president and chief executive, said in a statement.
“This is a testament to the success of our positioning as America’s favorite diner, emphasizing everyday affordability with attractive limited time only products,” he added.
Miller said the company would continue to work closely with franchisees to maintain growth in units, sales and profitability, while generating additional free cash flow to strengthen the balance sheet and repurchase shares.
Denny’s said it anticipated 2012 same-store sales growth of from flat to 2 percent for both company and franchised stores. It plans to add 45 to 50 new restaurants to its system.
Denny’s Corp. is based in Spartanburg, S.C.
Contact Alan J. Liddle at [email protected].
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