Los Angeles, Jan. 31 - Burger King Holdings Inc posted a quarterly profit Thursday that topped Wall Street expectations and said it has not experienced the slowdown in U.S. consumer spending that has contributed to weaker results at other restaurant chains.
Shares in the No. 2 hamburger chain rose as much as 8.4 percent after the company raised its full-year profit forecast and said its U.S. business was off to a strong start in January.
U.S. consumers, spending less on food outside the home as they pay more for fuel and food and as home prices decline, helped drive down domestic results at McDonald's Corp and Starbucks Corp.
"U.S. comps (comparable store sales) were strong throughout the quarter and remained strong, even accelerating, into January. We have not and are not seeing a slowdown," Burger King Chief Executive John Chidsey said in a conference call following the company's report of a higher fiscal second-quarter profit.
Chidsey also said the company's European business remained healthy.
Telsey Advisory Group analyst Mitch Speiser said the results were unexpected, given that McDonald's on Monday reported flat U.S. same-stores from December, the lowest monthly level in nearly five years, due in part to severe winter weather.
"It was a bit of a surprise how Burger King was bullish on the January sales trend while McDonald's was cautious," he said.
Miami-based Burger King posted second-quarter net income of $49 million, or 36 cents per share, compared with net income of $38 million, or 28 cents per share, in the year-ago quarter ended Dec. 31.
Quarterly revenue rose 10 percent to $613 million, boosted by currency exchange rates, strong worldwide sales and the popularity of its Homestyle Melt sandwich in the United States.
Burger King -- which also cited success of its "Whopper Freakout" campaign marking the 50th anniversary of its best-known burger -- said earnings excluding items were 36 cents per share, topping analysts' average forecast for a profit of 33 cents per share on revenue of $598.7 million, according to Reuters Estimates.
"We succeeded in a challenging macro-environment with marketing initiatives that drove increased sales and traffic," Chidsey said.
Worldwide comparable store sales climbed 4.5 percent during the quarter while sales at established restaurants rose 4.2 percent in the United States and Canada, said the company, which has more than 11,300 company-owned and franchised restaurants around the world.
Chidsey said the company expects continued momentum in Burger King's business.
"We have increased our year-over-year earnings per share growth guidance to be in excess of 15 percent," he said on the call with analysts. The company's prior forecast had called for earnings growth of 12 percent to 15 percent.
Thomas Weisel Partners analyst Matt DiFrisco in a client note called the burger chain's outlook conservative, since per-share earnings grew 22 percent in the first half of fiscal 2008 and growth has continued into the second half.
"Fifteen percent-plus seems like an easy bar to beat. It's always good to be conservative," said Speiser.
"In this weak environment I think it's going to be hard to find restaurants that are growing their earnings over 15 percent," he said.
Shares in Burger King, which reached as high as $26.19 during the session, were up $1.57, or 6.5 percent, to $25.73 in afternoon trade on the New York Stock Exchange.