Jack in the Box (JACK 96.30, +1.62) has climbed 1.7% despite missing earnings expectations for the third quarter and lowering its guidance for the full year. Today's advance comes after the stock notched its 2017 low last week.
The fast food restaurant operator reported below-consensus third quarter earnings of $0.99 per share on a 3.0% year-over-year increase in revenue to $357.80 million, which was just shy of expectations.
The company's earnings were reduced by $4.40 million or $0.10 per share due to a takeover of 31 franchised Jack in the Box restaurants that were underperforming. The company sold 58 restaurants during the third quarter, bringing the year-to-date count to 118 sales. The company has signed non-binding letters of intent with franchisees to sell 63 more Jack in the Box restaurants.
Jack in the Box systemwide same-store sales ticked down 0.2% year-over-year. Sales at company-owned restaurants fell 1.6% while franchise sales ticked up 0.1%.
For Qdoba, systemwide sales increased 0.5% with franchise sales growing 2.3% while sales at company-owned restaurants declined 1.1%.
Consolidated restaurant operating margin declined to 18.1% from 21.9% due to pressure from higher labor costs, higher repair & maintenance costs, and commodity inflation. Franchise margin improved to 54.0% from 52.8% one year ago.
The company lowered its guidance for the full year, expecting earnings between $4.00 and $4.15 per share, down from previous expectations for earnings between $4.10 to $4.30 per share. Same-store sales at Jack in the Box are expected to be up 0.5% while Qdoba sales are expected to grow between 2.0% and 2.5%.
Jack in the Box is still evaluating its strategic alternatives with respect to Qdoba.