Noodles & Company on Thursday reported a 13 percent decline in net income for its June 30-ended second quarter, but said sales-building initiatives are underway.
The Broomfield, Colo.-based company reported net income of $3.1 million, or 10 cents per diluted share, for the quarter, compared with $3.5 million, or 11 cents per diluted share, a year ago.
Adjusting for one-time charges, net income decreased to $3.1 million, or 10 cents per diluted share, from $3.7 million, or 12 cents per diluted share, a year ago.
Same-store sales were flat systemwide, increasing 0.1 percent at company-owned restaurants but decreasing 0.5 percent at franchise units, the company said.
Revenues increased nearly 16 percent to $115.2 million, compared with $99.5 million a year ago.
Kevin Reddy, Noodles & Company’s chair and CEO, said the chain opened its first restaurant in Canada during the quarter and made progress in underperforming markets.
“While our comparable restaurant sales and net income in the second quarter fell below our expectations, the underlying business model remains strong, as evidenced by an increase in adjusted earnings before interest, taxes, depreciation and amortization, or EBITDA, compared to the prior year and the generation of $22.7 million of cash flow from operations during the second quarter of 2015,” he said in a statement.
“Additionally, we repurchased $6.3 million of common stock as part of our recently announced share repurchase program.”
Comparable sales and income results will likely be muted for the balance of the year as the company invests in sales-building initiatives while addressing rising labor costs, Reddy added.
The company made progress in refining the culinary and marketing initiatives that will be implemented during the second half of the year, he said.
“We believe strongly that executing an integrated marketing campaign communicating our commitment to real cooking, as well as pure and wholesome ingredients, will significantly elevate our brand awareness and help us meet today’s guest expectations,” Reddy said.
“We are committed to bringing the marketing campaign to life during the balance of the year, as well as key culinary and operational initiatives that will allow us to capitalize more fully on our strength with Millennial families.”
During the quarter, 17 new restaurants opened, including 11 company-owned and six franchise restaurants, for a total of 472.
For the year, Noodles & Company downgraded its guidance, saying same-store sales will likely range between flat to a low-single-digit increase. Earlier projections included a low-single-digit increase.
Revenues are projected to range between $460 million and $465 million, and 48 to 52 new company locations and 15 to 18 new franchise restaurants are scheduled to open.
Contact Lisa Jennings at [email protected]
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