030308 Popeye's Chicken Parent Sees Flat Sales

Atlanta - AFC Enterprises Inc. which franchises and operates Popeye's Chicken & Biscuits, Church's Chicken, Seattle's Best Coffee and other fast-food restaurants, on Wednesday said it expects flat domestic comparable-store sales systemwide for 2003.

Broken down by brand, the company said it expects comparable, or same-store, sales to be flat at Popeye's and down 2% to 3% at Church's.

Fast-food chains are in the midst of a difficult period, beset by price wars and consumers' appetite for healthier alternatives.

AFC is anticipating comparable-store sales flat to up 1% at the Seattle Coffee Company and up 1% to 2% at its Cinnabon cinnamon bun chain.

The company said 2003 income from continuing operations is expected to be $52.1 million. It will release 2002 results in March. Profit will likely be reduced by $900,000 as lower sales, extra discounts and other factors cut into margins, AFC said.

Atlanta-based AFC also said it plans to open a net of 325 to 350 new units in 2003.

The company said it expects to generate $60 to $70 million in free cash flow in 2003 and intends to use it to repurchase its shares after obtaining additional share repurchase authorization, assuming market conditions remain at current levels.

In 2002, it repurchased $78 million in stock, or 3.7 million common shares.

Frank Belatti, chairman and chief executive, and Gerald Wilkins, executive vice president and chief financial officer, will speak Wednesday at the Bear Stearns Ninth Annual Retail Conference.

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