Same-Store Sales Down in Luby's Third Quarter

Luby's, Inc. today announced unaudited financial results for the third quarter of fiscal 2009, which ended on May 6, 2009.

-- Chain Leader, 6/11/2009 12:25:00 PM

PRESS RELEASE: HOUSTON--(BUSINESS WIRE)--Luby's, Inc. (NYSE:LUB) today announced unaudited financial results for the third quarter of fiscal 2009, a twelve-week period, which ended on May 6, 2009.

Third Quarter Highlights:

* Restaurant sales were $66.0 million, a decrease of $6.7 million compared to the same quarter last year; approximately $1.5 million of the reduction in sales related to closed operations partially offset by new restaurant sales.

* Culinary contract services revenue increased to $3.0 million in the third quarter compared to $1.8 million in the same quarter last year. The increase was due to culinary contract services operating 13 facilities as of May 6, 2009 compared to operating 9 facilities as of May 7, 2008.

* Restaurant sales declined $6.7 million in the third quarter but store level profit declined only $1.4 million due to effective cost management. The Company defines store level profit as restaurant sales minus costs of food, payroll and related costs and other operating expenses.

* Same-store sales, which consisted of 118 restaurants, decreased approximately 8.9% due primarily to declines in guest traffic partially offset by higher menu prices. The third quarter fiscal 2009 partially benefited from the favorable timing of Lent in the third quarter. Adjusted for this item, the Company estimated same-store sales declined approximately 9.4% in the third quarter fiscal 2009.

Same-Store Sales (118 stores)
	Q1FY09		Q2FY09		Q3FY09		YTD
Reported	(6.7%)		(3.2%)		(8.9%)		(6.3%)
Adjusted	(3.8%)	^a	(5.0%)	^b	(9.4%)	^c	(6.1%)	^d

a) The first quarter fiscal 2009 was adversely affected by the unfavorable timing of Thanksgiving, which occurred after quarter-end, and by the closure of stores related to Hurricane Ike.

b) The second quarter fiscal 2009 benefited from the favorable timing of Thanksgiving at the beginning of the quarter and, to a lesser extent, was adversely affected by the unfavorable timing of Lent, which began after quarter-end.

c) The third quarter fiscal 2009 partially benefited from the favorable timing of Lent.

d) Includes all footnotes.

Total sales decreased 7.5% in the third quarter fiscal 2009 to $69.0 million, compared to $74.6 million in the same quarter last year. Culinary contract services sales were $3.0 million in the third quarter compared to $1.8 million in the same quarter last year. Restaurant sales in the third quarter were $66.0 million compared to $72.7 million in the same quarter last year. The $6.7 million decline in restaurant sales included a $1.5 million reduction in sales related to closed operations partially offset by new restaurant sales.

The Company reported a loss from continuing operations in the third quarter of $1.0 million, or $0.04 per diluted share, compared to income from continuing operations of $1.0 million, or $0.03 per diluted share in the same quarter last year. Included in the loss from continuing operations this year are the after tax impact of the following items; 1) approximately $0.02 per diluted share due to an impairment charge for the decrease in fair value investment and 2) approximately $0.01 per diluted share net gain on disposition of property and equipment primarily due to insurance proceeds associated with an insurance settlement related to Hurricane Ike.

"In the third quarter we experienced a continuation of the macro-economic environment pressure and its affect on customer frequency and sales. However, our team controlled costs well in the quarter to preserve store level margins," said Chris Pappas, President and CEO. "We remain committed to developing and introducing offerings and price points aimed to increase customer frequency with the long-term goal of growing profitability and cash flow from operations at our existing restaurants."

Food costs decreased approximately $1.9 million in the third quarter fiscal 2009 compared to the same quarter last year due to lower sales volume. Food costs as a percentage of restaurant sales decreased to 27.3% in the third quarter fiscal 2009 from 27.4% in the third quarter last year primarily due to lower commodity costs, offset by higher menu prices.

Payroll and related costs decreased $1.2 million in the third quarter fiscal 2009 compared to the same quarter last year due to lower crew overtime and lower management costs offset by higher average wages paid to crew employees. Payroll and related costs as a percentage of restaurant sales increased to 36.5% in the third quarter fiscal 2009 from 34.8% in the same quarter last year, primarily due to reduced restaurant sales.

Other operating expenses primarily include restaurant-related expenses for utilities, repairs and maintenance, advertising, insurance, supplies, services and occupancy costs. Other operating expenses decreased by approximately $2.2 million compared to the same quarter last year. As a percentage of restaurant sales, other operating expenses decreased to 22.6% compared to 23.5% in the same quarter last year. Other operating expenses decreased primarily due to 1) an approximate $0.7 million reduction in repairs and maintenance expense related to improvements in cost controls, 2) an approximate $0.8 million, net decrease in restaurant supplies, services and other operating expenses on reduced restaurant sales, and 3) an approximate $0.7 million reduction in utility expense.

Depreciation and amortization expense increased approximately $0.3 million in the third quarter fiscal 2009 compared to the same quarter last year due to higher depreciable asset base generated by increased capital expenditures in fiscal 2008, including the opening of three restaurants, as well as upgrades and remodels to existing units.

General and administrative expenses include corporate salaries and benefits related costs, including restaurant area leaders, share-based compensation, professional fees, travel and recruiting expenses and other office expenses. General and administrative expenses increased by approximately $0.2 million in the third quarter fiscal 2009 compared to the same quarter last year. As a percentage of total sales, general and administrative expenses increased to 8.6% in the third quarter compared to 7.7% in the same quarter last year. The increase was due to approximately $0.3 million in professional fees primarily related to the defense of pending claims and $0.1 million in severance expense.

Conference Call

The Company will host a conference call today at 4:00 p.m., Central Time, to discuss third quarter fiscal 2009 results. To access the call live, dial 888-755-9496 and use the participant pin code, Lubys (58297), at least 10 minutes prior to the start time, or listen live over the Internet by logging on to www.lubys.com.

About Luby's

Luby's operates 120 restaurants in Austin, Dallas, Houston, San Antonio, the Rio Grande Valley and other locations throughout Texas and other states. Luby's provides its customers with quality home-style food, value pricing, and outstanding customer service.

This press release contains statements that are "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements contained in this press release, other than statements of historical fact, are "forward-looking statements" for purposes of these provisions, including the statements under the caption "Company Outlook" and any other statements regarding plans for expansion of the Company's business, scheduled openings of new units, expected levels of capital expenditures, and expectations of industry conditions.

The Company wishes to caution readers that various factors could cause its actual financial and operational results to differ materially from those indicated by forward-looking statements made from time to time in news releases, reports, proxy statements, registration statements, and other written communications, as well as oral statements made from time to time by representatives of the Company. The following factors, as well as any other cautionary language included in this press release, provide examples of risks, uncertainties and events that may cause the Company's actual results to differ materially from the expectations the Company describes in its "forward-looking statements": general business and economic conditions; the impact of competition; our operating initiatives; fluctuations in the costs of commodities, including beef, poultry, seafood, dairy, cheese and produce; increases in utility costs, including the costs of natural gas and other energy supplies; changes in the availability and cost of labor; the seasonality of the Company's business; changes in governmental regulations, including changes in minimum wages; the effects of inflation; the availability of credit; unfavorable publicity relating to operations, including publicity concerning food quality, illness or other health concerns or labor relations; the continued service of key management personnel; and other risks and uncertainties disclosed in the Company's annual reports on Form 10-K and quarterly reports on Form 10-Q.

« Back | Print