San Diego, Sep. 17 - CKE Restaurants Inc, the parent of Carl's Jr and Hardee's, Wednesday posted a quarterly profit that topped Wall Street targets, helped by higher sales at established outlets, lower restaurant costs and share buybacks.
But the company, known for its oversized hamburgers like the Prime Rib Burger, also said that fast-food industry discounting tempered sales during the first four weeks of the current quarter.
Net income for the fiscal second quarter ended Aug. 11 was $12.3 million, or 23 cents per diluted share, compared with analysts' average call for earnings of 20 cents per share, according to Reuters Estimates.
In the year-earlier quarter -- when the company had 11 million more shares outstanding -- CKE income was $9.4 million, or 15 cents per diluted share.
CKE said sales at established company-operated restaurants increased 3.6 percent during the quarter, compared with the year-earlier quarter's increase of 2.4 percent.
Sales at company-owned Carl's Jr stores open at least 13 months were up 3.8 percent, while sales at CKE-owned Hardee's restaurants were up 3.3 percent.
Restaurant operating costs declined as reduced payroll and employee benefits costs more than offset higher food and packaging costs.
Total revenue was $352.5 million, down almost 3 percent from $363.1 million a year earlier.
Revenue from company-operated restaurants fell more than 7 percent to $267.1 million, reflecting the sale of 155 Hardee's restaurants to franchisees.
At the end of the quarter, CKE had a total of 3,100 franchised, licensed or company-operated restaurants in 42 states and in 14 countries, including 1,170 Carl's Jr. restaurants and 1,917 Hardee's restaurants.
In a separate release, CKE said same-store sales at established restaurants rose 0.4 percent during the four-week period ended Sept. 8, as industry discounting tempered sales.
The Carpinteria, California-based company said sales at stores open at least 13 months were down 0.1 percent at Carl's Jr and up 1.1 percent at Hardee's outlets.
"We believe both brands' sales results were tempered by competitors' aggressive discounting and literal giveaways, a tactic our company declined to employ because of its negative impact on margins," CKE Chief Executive Andrew Puzder said in a statement.
CKE, which does not heavily promote its value menu, said the company saw a decline in sales of its lower-margin value products during the period.
The company also said certain Hardee's markets were hit by the remnants of Hurricanes Gustav and Hanna and Tropical Storm Fay, which rolled through the Midwest and Southeast during the period.
CKE had closed down 11.4 pct at $11.73 Wednesday on the New York Stock Exchange and were unchanged after hours.