Luby's Reports Sharp Decline in Q2 Earnings

by Rich Duprey, The Motley Fool Mar 21st 2013 9:02PM
Updated Mar 21st 2013 9:06PM

Restaurant operator Luby's reported earnings that fell sharply in the second quarter, as food cost inflation and consumers tightening their discretionary spending sapped expansion. Profits dropped 81% to just $203,000, or $0.01 per share, from $1.1 million, or $0.04 per share in the year ago period. Revenues, however, were up 10%, to $87.5 million, mainly from the December acquisition of the Cheeseburger in Paradise chain.

Same-store sales at restaurants open at least 18 months, a key retail metric because it eliminates the effects of expansion by measuring organic growth only, fell 0.6% in the quarter.

Luby's runs 94 Luby's Restaurants, 54 Fuddruckers, two Koo Koo Roos, and now 23 Cheeseburger in Paradise restaurants.

The restaurant operator offered full-year earnings guidance of $0.21 to $0.25 per share, which is lower than its prior guidance of $0.27 to $0.30 per share.

The article Luby's Reports Sharp Decline in Q2 Earnings originally appeared on Fool.com.

Fool contributor Rich Duprey has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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dinohealth

Yep, as noted on their cash-flow statement, in addition to reduced revenue, and, the acquisition of Fuddruckers, what this tells me is that Luby's is executing a strategy that is still investing heavily in capital expense items . i.e. its restaurants, old, and, newly-acquired. Kinda makes sense for a company that has had major expansion/purchases/acquisitions over the last few years, as there is extensive realignment/remodelling that goes along with that. Also tells me, that they are in it for the long term, and positioning themselves in the market Frankly, that means solid investment to me....

April 09 2013 at 6:28 PM Report abuse Permalink rate up rate down Reply