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Jack in the Box springs unpleasant surprise as same-store sales slide

The like-for-like sales performance at the Jack in the Box burger outlets was 2.9 percentage points below the sector average.
The restaurants operator is going through a retrenching period

Fast food purveyor Jack in the Box Inc (NASDAQ:JACK) found sales growth hard to come by in the three months to the end of September.

Its flagship burger-based chain saw like-for-like (LFL) sales in the 12 week period fall 1.0% from a year earlier, while Qdoba, its Mexican food chain that could soon be put up for sale, saw its LFL sales dip 2.1%.

The LFL sales performance at the Jack in the Box burger outlets was 2.9 percentage points below the sector trend.

At Qdoba, the drop-off in LFL sales reflected a 6.4% decrease in transactions.

Group revenues fell to US$338.7mln from US$398.4mln a year earlier, though the comparative period had an extra week in it.

The group’s post-tax earnings from continuing operations declined to US$30.3mln in what was the final quarter of the company’s financial year from US$32.6mln the year before, capping a “challenging year for both brands”, according to Lenny Comma, chairman and chief executive officer of the company.

Earnings per share (EPS) rose to US$1.02 from 98 cents in the same quarter of 2016.

The restaurants operator is going through a retrenching period, and restructuring charges shaved six cents from in the quarter, compared to a five cent reduction the year before.

"We continue to make significant progress on our Jack in the Box refranchising initiative, with the sale of 60 restaurants in the fourth quarter and 178 during the fiscal year. We currently have signed non-binding letters of intent with franchisees to sell 32 additional restaurants, and now anticipate the Jack in the Box franchise mix to approach the high end of our previous expected range,” Comma said.

The group said that it had made “substantial progress” in its evaluation of the options available for its struggling Qdoba brand, but added it would make no further comment on its plans until the evaluation process is complete.

The shares were down 4.3% at US$97.87 in pre-market trading.

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