Luby's, Inc.
Q2 2013 Earnings Call Transcript

Published: 21 Mar 2013

[Operator:]

Good day, ladies and gentlemen, thank you for standing by. Welcome to the Luby's Second Quarter Earnings Conference Call. [Operator Instructions] This conference is being recorded today, Thursday, March 21, 2013. I would now like to turn the conference over to Steve Goodweather, Vice President of Financial Planning and Analysis. Please go ahead, Sir.

[Steve Goodweather:]

Thank you, and welcome, everyone, to Luby's 2013 Fiscal Second Quarter Earnings Conference Call. This call is also being webcast and can be accessed through the audio replay of Luby's -- on Luby’s website, lubysinc.com. That's lubysinc.com. Information recorded on this call speaks only as of today, March 21, 2013. Before we continue, I would like to remind you that the statements in this discussion, including statements made during the question-and-answer session regarding Luby’s future financial and operating results, as well as plans for expansion of the company's business, including the expected financial performance of the company's prototype restaurants and future openings, are forward-looking statements. They include risks and uncertainties, including, but not limited to, general business conditions, the impact of competition, success of operating initiatives, changes in commodity cost and supply of food and labor and seasonality of the company's business, taxes, inflation, governmental regulations and availability of credit, as well as other risks and uncertainties disclosed in the company's periodic reports on Forms 10-K and Forms 10-Q. I will now turn the call over to Luby's President and CEO, Chris Pappas.

[Christopher J. Pappas:]

Good morning. Thanks, Steve. Welcome to all of you, and thank you for joining us on our 2013 second quarter earnings conference call. With me today are Scott Gray, our Senior Vice President and CFO; and Peter Tropoli, our Chief Operating Officer. The fiscal second quarter, which ran from November 22, 2012, to February 13, 2013, presented a number of opportunities, as well as a few challenges. I'll speak about our new acquisition, Cheeseburger in Paradise, as well as our new Fuddrucker openings and other units in development later in the call. But first, I'll address the challenges. We saw a reduction in consumer discretionary spending. We attribute this to escalating gas prices, higher payroll taxes, and sequestration concerns. This soft demand has been reported by other retailers as well. As the quarter progressed, it became apparent that these factors were having a manageable impact on our business and that they were more than the usual week-to-week variability in our business. Long term, we believe we're well-positioned to succeed. We believe that we can overcome these headwinds. As we have done before, we are developing initiatives to drive guest traffic and we're tackling each expense line to ensure we are properly navigating through the economic landscape. We began the fiscal year focused on expanding our store operating margins, and we will remain determined to make progress on this goal. Our income from continuing operations declined to $603,000 in the fiscal second quarter from $1.4 million in the comparable quarter last year. Adjusting for special items, we lost $37,000 from continuing operations in this fiscal year's second quarter. As you've already read in our press release, we're lowering our sales and earning guidance for 2013. This is mainly due to external economic issues. We choose not to raise prices -- we chose not to raise prices this quarter in light of the current environment as we more focused on maintaining the frequency of our guest visits. As we see among our restaurant peer group, others have also seen a fall in traffic recently. In order to compete better going forward, turn year-over-year comparable sales positive, and improve cash flows and enhance shareholder value, we will continue to focus on the following

[K. Scott Gray:]

Okay. Thank you, Chris, and good morning, everyone. Before I review the financial results, I just want to remind you that the results contain approximately 10 weeks of Cheeseburger in Paradise. Since December 6, the date of the first day of business and bringing Cheeseburger in Paradise into, as part of Luby's family of brand, these locations have generated $7.7 million in sales. However, seasonally, this time period historically is not profitable for this brand as we have experienced and expected in the near-term as the new owners of the brand. To explain the seasonality, consider the following

[Operator:]

[Operator Instructions] And I am currently showing no questions in the queue. I will turn it back over to the presenters for any closing comments.

[Christopher J. Pappas:]

Well, this is Chris Pappas, and I'd like to thank you, all, for joining us on the call today. We look forward to speaking with you again in June for our third quarter earnings call. Thank you.

[Operator:]

Ladies and gentlemen, this does conclude the conference call. If you'd like to listen to a replay of today's conference, please dial [phone] and entering the access code of 4604208. Thank you for your participation. You may now disconnect.