Well, my so called "narrow" view of "commodity inflation" is having continual real impact outside the Land of Oz. If you don't think consumers aren't absorbing most this you need to listen to some conference calls in the food and retailing area.
Message 19993635
Webcast food:http://www.veracast.com/webcasts/bas/consumer-2004/id94210413.cfm
I did last night, and if you were to take the trouble, I'm convinced our debate about the narrowness of this inflation will be put to rest. I think broad inflation may be running 2-3% monthly now, and that's hyper-inflationary.
Reuters
Cheese Costs to Hurt Papa John's Results
Tuesday April 6, 8:35 pm ET
NEW YORK (Reuters) - Pizza restaurant chain Papa John's International Inc. (NasdaqNM:PZZA - News) said on Tuesday higher cheese prices and costs related to consolidating a unit would cut into operating earnings for the year.
Papa John's domestic systemwide March comparable sales fell 3.7 percent, and domestic systemwide comparable sales for the quarter ended March 28 inched up 0.5 percent.
Louisville, Kentucky-based Papa John's said the incremental increase in cheese costs is expected to increase additional restaurant food costs in a range of 60 to 70 basis points as a percentage of restaurant sales.
The company backed its 2004 earnings forecast of $2.20 to $2.28 a share, excluding any potential earnings impact from the consolidation of its program that establishes the cost of cheese.
Including the impact from this consolidation, the company is forecasting earnings per share in a range of about $1.34 to $1.42.
Three analysts, on average, had been expecting it to earn $2.16 per share for 2004, according to Reuters Research, a unit of Reuters Group Plc.
Papa John's has a program that establishes the cost of cheese on a quarterly basis, which is executed by a franchisee-owned entity called BIBP Commodities Inc.
The company began consolidating the financial results of BIBP at the end of the fourth quarter of 2003, and said on Tuesday the consolidation will cut the company's first-quarter operating income by about $1.5 million to $1.8 million.
In addition, Papa John's said the consolidation of BIBP is projected to affect the company's operating income in the second quarter by about $19 million and by about $6 million in the third quarter; but will boost it by about $2 million in the fourth quarter.
Shares of Papa John's closed down $1.84, or 5.6 percent, at $31.09 on Tuesday. |
