BJ’s Eating places (BJRI) Q2 Earnings Miss Estimates, Inventory Down

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BJ’s Restaurants (BJRI) Q2 Earnings Miss Estimates, Stock Down

BJ’s Restaurants, Inc. BJRI reported mixed results for the second quarter of fiscal 2022 (ending June 28, 2022), with earnings missing and revenue exceeding the Zacks Consensus estimate. Sales have increased year over year while profit has declined year over year.

Following the results, the company’s shares fell 5.3% during the after-hours trading session on July 21. Negative investor sentiment was observed as the company raised concerns about the elevated inflationary environment and its potential impact on restaurant margins.

Income & Income

During the quarter, the company reported adjusted earnings per share (EPS) of 10 cents, falling short of the Zacks Consensus estimate of 23 cents. In the prior-year quarter, the company reported adjusted EPS of 26 cents per share.

BJ’s Restaurants, Inc. Price, Consensus and EPS Surprise

BJ’s Restaurants, Inc. Price Consensus EPS Surprise Chart | Quote from BJ’s Restaurants, Inc

Total earnings of $329.7 million exceeded Zacks’ consensus estimate of $328 million by 0.5%. Revenue increased 13.6% year over year.

Comparable restaurant sales increased 11.7% year over year in the fiscal second quarter, compared to growth of 121.9% in the year-ago quarter. It also increased by 4.8% from 2019 levels. The company said positive momentum continued in the fiscal third quarter, with comps growth for the current period (ended July 21) reported at 4% from 2019 levels.

Expenditures & Operating Margins

In the fiscal second quarter, labor costs — as a percentage of revenue — were 37.3%, up 140 basis points (bps) year over year. Occupancy and operating expenses (as a percentage of revenue) were 23.2%, compared to 23.3% in the year-ago quarter. General and administrative expenses (as a percentage of revenue) fell 80 basis points year over year to 5.1% for the quarter.

During the quarter, restaurant-level operating margin was 11.9%, compared to 14.8% in the year-ago quarter.

save count

As of June 28, 2022, BJ’s Restaurants owned and operated 214 casual dining restaurants (located in 29 states). During the quarter, the Company opened a new restaurant in San Antonio, TX. It also opened a new restaurant in Framingham, Massachusetts. The company reported solid opening performances. The company plans to open five new restaurants in the second half of the year.

The company made solid progress on its two pilot remodels in terms of dining room capacity expansion and new design elements. Given the positive customer feedback and increased sales generated by the remodeled locations, the company remains optimistic and expects to continue this initiative in the coming periods.

balance sheet

As of June 28, 2022, cash and cash equivalents totaled $37.8 million compared to $27.2 million on March 29, 2022. Total debt as of June 28, 2022 was $50 million dollars, in line with the previous quarter’s estimates.

Zack’s Rank & Key Picks

BJ’s Restaurants has a Zacks Rank #5 (strong selling).

Some better ranked stocks in the Zacks retail sector are Dollar Tree Inc. DLTR, Designer Brands Inc. DBI and Potbelly Corporation PBPB.

Dollar Tree has a Zacks Rank #1 (Strong Buy). The company has a trailing four-quarter earnings surprise averaging 13.1%. The company’s shares are up 71.4% over the past year. You can see see the full list of today’s Zacks Rank #1 stocks here.

Zacks consensus estimate for Dollar Tree’s 2022 sales and EPS points to growth of 6.7% and 40.5%, respectively, from the prior-year period.

Designer Brands has a Zacks Rank #1. The company has a trailing four-quarter earnings surprise averaging 102.5%. The company’s shares are up 1.3% over the past year.

Zacks consensus estimates for designer brands sales and EPS in 2023 point to growth of 6.9% and 16.5%, respectively, from the prior-year period.

Potbelly carries a Zacks Rank #2 (Buy). The company has a trailing four-quarter earnings surprise averaging 26.2%. The company’s shares are down 20.2% over the past year.

Zacks consensus estimates for Potbelly’s sales and earnings per share in 2022 point to growth of 14.6% and 94.2%, respectively, from the year-ago period.

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