February 20, 2008 / 7:09 PM / in 10 years

UPDATE 2-Jack in the Box Q1 results beat Wall Street estimate

(Adds details, share movement, analyst’s comments)

By Sreerupa Mitra

BANGALORE, Feb 20 (Reuters) - Hamburger chain Jack in the Box Inc JBX.N posted a better-than-expected quarterly profit, helped by a rise in revenue on addition of new products to its menu, and raised the top end of its 2008 earnings forecast, sending its shares up more than 5 percent.

The company, whose products range from burgers and fries to salads, tacos, and breakfast items, said same-store sales rose 1.5 percent at its namesake restaurants for the first quarter.

Same-store sales at the San-Diego based chain were slightly hurt by the California rain storm in January, analyst Brian Moore of Wedbush Morgan Securities said by phone.

“The company has tremendous product momentum and I expect new products (like smoothies) to drive same-store sales growth,” Moore added.

Jack in the Box launched several products such as sirloin steak melt, grilled chicken strips, chicken fajita pita and a value-priced combo meal, The Big Deal, in the first quarter.

The company, which competes with McDonald’s Corp (MCD.N), Burger King Holdings Inc (BKC.N) and Yum! Brands Inc (YUM.N), plans to roll out three flavors of real fruit smoothies in partnership with Coca-Cola Co (KO.N) in the third quarter.

For the second quarter, the company sees a 1 percent to 2 percent rise in same-store sales at Jack in the Box company restaurants and a 3 percent to 5 percent increase at Qdoba system restaurants.


For the year ending Sept. 30, 2008, it sees earnings of $1.98 to $2.08 a share, including charges of 17 cents a share related to its restaurant re-image program and higher tax rate. It had previously forecast earnings of $1.98 to $2.06 a share, including charges of 15 cents a share.

Analysts were expecting a profit of $2.06 a share, before items, according to Reuters Estimates.

In a note to clients, Moore, who raised his rating on the hamburger chain’s stock to “strong buy” from “buy,” said the the company’s outlook is still conservative, given its multi-year history of earnings beats.

Moore also raised his price target to $38 from $33 on the company’s stock.

The company forecast a 2 percent to 3 percent rise in same-store sales at its namesake restaurants for the year.


For the quarter, the company earned $36.5 million, or 60 cents a share, compared with $37.4 million, or 52 cents a share, a year ago.

Revenue rose 6 percent to $904.9 million.

Analysts on average expected earnings of 57 cents a share, before special items, on revenue of $884.9 million.

The company is executing well on the controllables, or store-level execution of margins, and has the most operating leverage with 67 percent store ownership as compared to less than 20 percent for its peers, Wedbush’s Moore said.

Shares of Jack in the Box were trading up $1.50 at $28.11 in late afternoon trade on the New York Stock Exchange. (Editing by Vinu Pilakkott, Himani Sarkar)

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