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Jack in the Box Inc.’s fourth quarter profit increased 51 percent, soaring above analyst expectations, but sales dropped and the company expressed caution about 2010. The stock dropped 7.6 percent.
The San-Diego based restaurant company that operates Jack in the Box and Qdoba Mexican Grill franchises, four of which are in Chicago, had net income of $40.6 million, or 70 cents per diluted share, in the quarter ended Sept. 27. That compared with a net income of $26.9 million, or 47 cents per diluted share, in the same quarter of the prior year. The estimate by analysts polled by Yahoo Finance was 55 cents per diluted share.
Quarterly sales were $540.3 million compared with $582.7 million in the year-earlier quarter, a decrease of 7.3 percent.
In the fourth quarter Jack in the Box initiated two promotions, including offering two of its burgers for $1.00 each. It continued its rebranding plan including menu innovation, enhanced facilities and improvements in guest service.
“We do know that we need to offer compelling value especially in this very competitive market place. We want to offer value that doesn’t erode our margins. It’s really about profitable sale,” said Linda A. Lang, Jack in the Box’s chief executive officer and chairman of the board, in a conference call.
Lang said of expanding the Qdoba business, “We don’t want to go into these retail centers without tenants being adjacent to us. When the economy improves, we will ramp up growth.”
R.J. Hottovy, an analyst with Morningstar Inc., said, “I’m pleased with the fourth quarter results. They did a good job navigating a tough environment. The thing that I liked was the reimaging program: revamping the interior and exterior of stores. This might have a meaningful benefit, maybe not next year but the year after. I look at that as a positive.”
Jack in the Box expects earnings of $1.90 per diluted share to $2.10 per diluted share for the year ending in September 2010. Analysts polled by Yahoo Finance estimate earnings of $2.32 per diluted share, and sales of $2.44 billion.
Net income in the 52 weeks ended Sept. 27 was $118.4 million, or $2.05 per diluted share, compared with $119.3 million, or $2.01 per diluted share, in the year earlier. Revenue fell 2.7 percent to $2.47 billion from $2.54 billion.
Jack in the Box’s stock closed Thursday at $18.50, down $1.53.