Columbus, OH - Bob Evans Farms, Inc. announced increased sales and earnings per share for its third fiscal quarter and nine months ended Jan. 29, 1999.
The results primarily reflect continued strength in restaurant same-store sales, as well as volume growth and substantially improved profitability in the food products segment. For the third fiscal quarter, which included 14 weeks this year compared with 13 weeks a year ago, net sales rose 14 percent to $250.5 million from $219.6 million. Net income increased 28 percent to $14.3 million, or $0.35 per share ($0.34 on a diluted basis), from $11.1 million, or $0.27 per share (basic and diluted). For the nine months, net sales were up 10 percent to $730.2 million, and net income rose 32 percent to $43.8 million, or $1.06 per share ($1.05 on a diluted basis).
Despite challenging weather conditions in most markets during January, the restaurant segment achieved its ninth consecutive quarter of same-store sales increases, with a five percent gain (excluding the extra week). While the additional week boosted sales for the quarter, a concurrent change in accounting, as well as severe weather, offset a portion of the positive impact on profits. Nevertheless, the segment's operating margin improved from a year ago; its operating income rose 16 percent on a 14 percent sales increase.
“We are pleased with the continued positive momentum at Bob Evans Restaurants,” said Daniel E. Evans, chairman of the board and chief executive officer. “Although severe winter weather negatively impacted same-store sales in early January, weekly same-store sales increases during November, December and the remainder of January have been among the strongest we have seen in several years. Our intensified focus on store-level operations which enhance customer service continues to set our restaurants apart from the competition.”
The pace of new restaurant openings is expected to accelerate in the fourth quarter and in fiscal 2000. During the third quarter, Bob Evans opened five new restaurants, for a year-to-date total of seven. The company plans to open approximately 13 restaurants in the fourth quarter, and at least another 25 in fiscal 2000.
Quarterly operating profits in the food products segment were up 46 percent, which reflected favorable raw material costs, strong volume growth and the extra week of operations. Hog costs in the company's sausage business averaged $21.00 per hundredweight, compared with $37.00 a year ago. Driven in part by increased promotional activity, volume from comparable products (principally sausage) rose 9 percent (excluding the extra week). New products also contributed to the segment's overall sales and profit increases for the quarter. Evans commented, “While our hog costs may have bottomed out, and probably will be closer to year- earlier levels in the quarters immediately ahead, we believe they will remain relatively moderate as we move into fiscal 2000.”
Evans concluded, “Both of our businesses have performed very well so far in fiscal 1999. We believe with our improved store-level performance, plans for accelerating expansion in the restaurant business, and our successful new product program in the food products segment, we have laid the foundation for sustained earnings growth over the long term.”
During the third quarter, the company repurchased 358,000 Bob Evans common shares, to raise the year-to-date total to 1,279,728 shares. At the end of the quarter, there were 40,998,705 shares outstanding. The balance sheet remains strong; as of Jan. 29, stockholders' equity was $473.1 million compared to total debt of $27.8 million.
On Feb. 11, 1999, the board of directors declared a quarterly cash dividend of nine cents ($0.09) per share on the company's outstanding common stock. The dividend is payable March 1, 1999, to stockholders of record at the close of business on Feb. 19, 1999.
Bob Evans Farms, Inc. owns and operates 414 full-service, family restaurants in 20 states, principally in the midwestern, mid-Atlantic and southeastern United States, as well as Texas. The company also is a leading producer of pork sausage under the Bob Evans and Owens brand names. Other operations include Mrs. Giles Country Kitchens, a producer of fresh deli salads, and Hickory Specialties, which manufactures charcoal and smoke- flavoring products.
Meat Industry Insights News Service
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