010225 Outback Steakhouse Shares Vaulted By Sales

New York - Shares of Outback Steakhouse Inc. shot up more than 20%, a day after the Australian-themed restaurant chain posted higher January same-store sales.

The stock was up $4.82, or 21.2%, at $27.45, in the higher end of its 52-week range of $20.25 to $31.75, and was the No. 1 percentage gain leader on the New York Stock Exchange.

The Tampa, Fla., company said on Monday its comparable-store sales for the four weeks ended Jan. 27 increased 7.9% from a year earlier at its more than 650 Outback Steakhouse casual-dining restaurants in the U.S. and 13 other countries.

The company attributed the rise to a 3.3% increase in the chain's per-person check average and a 4.5% increase in customers.

Same-store sales were aided by easy comparisons with sales affected by severe weather in January 2000 and the positive impact of the New Year's Eve trading day, Outback Steakhouse said in a statement.

The company also operates more than 80 Carabba's Italian Grills, which showed a 13.7% rise in January same-store sales.

“I think (the stock) has been somewhat a laggard performer,” said Fahnestock & Co. restaurant analyst Mike Smith. “There was some concern that it wasn't keeping up with the industry. I think the announcement yesterday proved it can.”

In a research note, Robertson Stephens analyst Andrew Barish called the company's sales increase “somewhat confusing” given the company's slower fourth-quarter sales.

Outback said in early January it expected higher labor and utility costs and lower than expected sales to hamper its fourth-quarter results by 15% to 18%.

Some analysts, however, weren't so surprised by Outback's recent positive performance, citing the restaurant industry's resilience during economic slowdowns.

“I think the recent (positive earnings) announcements by companies like Brinker International also allayed fears despite the somewhat uncertain environment,” Smith added.

Brinker, one of the country's largest casual dining operations, posted 27% higher earnings for its fiscal second quarter ended Dec. 27.

“I think casual dining has been very strong through 2000,” said Dennis Forst, managing director of McDonald Investments. “If economy is actually slowing, we could see flat sales sometime soon, but it hasn't happened yet.”

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