NASHVILLE Tenn. O’Charley’s Inc., operator or franchisor of 363 restaurants under three brands, swung to a third-quarter net loss from a year-ago profit as impairment and other charges ate into a revenue uptick of 0.9 percent to $220.9 million. The company also revised downward by between 24 cents and 26 cents its annual per-share earnings outlook. It was the company’s second downward revision, which it has blamed on weak same-store sales and the competitive yet suffering casual-dining sector.
The company reported on Thursday a net loss of $400,000, or 2 cents per share, for the quarter ended Oct. 7, versus a year-earlier profit of $2.1 million, or 9 cents per share.
O’Charley’s operations include 239 namesake units, 114 Ninety Nine Restaurant locations and 10 Stoney River Legendary Steaks. Excluding charges that totaled 22 cents per share from impairment, closures, supply chain changes and a divesture of its commissary, O’Charley’s net earnings totaled $3.8 million, or 16 cents per share, versus a year-ago profit of $2.1 million, or 9 cents per share.
Latest-quarter same-store sales fell 1.7 percent at O’Charley’s corporate units and 0.8 percent at Stoney River Legendary Steaks, but increased 1.5 percent at the Ninety Nine concept, the company reported. All three concepts reported an increase in average checks but a drop in traffic, said Gregory L. Burns, chairman and chief executive.
Burns said that while disappointed with the sales performance, the company believes that its 1.2-percent increase in restaurant-level margins provided evidence that the company’s efforts in branding — which include service, menu and decor upgrades — are on track to position the company for long-term growth and profitability.
Still, the company was forced to revise downwards its previously issued annual earnings guidance, it said. O’Charley’s now expects to report net earnings per share of between 42 cents and 47 cents for the fiscal year ending Dec. 30. Fiscal 2006 per-share earnings totaled 80 cents. The latest expectations are based on anticipated same-store sales declines of between 1 percent and 3 percent at the O’Charley’s brand, and anticipated same-store sales increases of between 1 percent and 3 percent for the Ninety Nine concept.
