Bob Evans Credits Sales Decline to Restaurant Closings
Bob Evans Farms, Inc. announced its financial results for the fiscal 2017 first quarter that ended July 29.
President and Chief Executive Officer Saed Mohseni says, “BEF Foods began fiscal 2017 with continued strong volume growth during the first quarter. Additionally, BEF Foods achieved market share gains in both its key side-dish and sausage product categories. We have completed the expansion of our Lima, Ohio, refrigerated side-dish plant and are now gearing up to meet peak holiday production which begins during the back half of the second quarter. The Lima plant expansion provides the added production capacity that is critical to our ongoing efforts to gain additional points of distribution, particularly in West Coast growth markets.
“While Bob Evans Restaurant sales remained challenged during the first quarter, we are encouraged by the moderating sales trend that began in July and continued into the second quarter, with quarter-to-date same-store sales of -2.0 percent through August 29. We believe our efforts to enhance the guest experience through improved hospitality and food quality are gaining the attention of guests and improving our sales trend. Positive guest comments increased 24 percent during the first quarter, while negative comments declined substantially; a trend we believe will contribute to future sales improvements. Our focus during the second quarter will be the system-wide launch of our exciting new value-oriented, guest-friendly menu along with relentless attention to improving the guest experience.”
Bob Evans Restaurants’ net sales were $220.4 million, a decline of $18.3 million, or 7.7 percent, compared to net sales of $238.7 million in the corresponding period last year. Same-store sales declined 4.3 percent with the balance of the net sales decline due to net restaurant closures during the past year. Five restaurants were closed and no new restaurants opened during the quarter. At the end of the quarter, the company operated 522 restaurants.
The April 2016 sale-leaseback transaction of 143 restaurant properties reduced operating income by around $0.4 million due to a $2.7 million increase in rent, partially offset by a $2.3 decline in depreciation compared to the prior year period.
Looking ahead, Mark Hood, chief administrative and chief financial offier, says, "We have adjusted our fiscal 2017 outlook to reflect underlying changes in certain of our assumptions and are increasing our GAAP diluted EPS guidance range to $2 to $2.17, from $1.95 to $2.12. Likewise, our non-GAAP diluted EPS guidance range has been raised to $2.05 to $2.20, from $2.00 to $2.15 previously.
“At Bob Evans Restaurants, we continue to expect full-year negative low-single digit to flat same-store sales and a neutral to slightly positive commodity cost environment. Additionally, we will continue to invest in improving the guest experience to drive sales. As for BEF Foods, we have lowered our sow cost forecast to reflect current expectations for the remainder of the fiscal year. At the corporate level, we have lowered our interest expense guidance to reflect a lower than anticipated interest rate environment this year and we will maintain our focus on lowering corporate and other costs required to support our businesses.”