Così, Inc. Reports Sales Growth for the 2006 Fourth Quarter and Full Year
Wednesday January 10, 7:00 am ET
Announces 2007-2008 Guidance
DEERFIELD, IL--(MARKET WIRE)--Jan 10, 2007 -- Così, Inc. (NASDAQ:COSI - News), the premium convenience restaurant company, today reported total revenues for the 2006 fourth quarter grew 11.3% to $31,783,900 from $28,552,300 in the 2005 fourth quarter. Company-owned restaurant revenues grew 10.2% in the quarter to $31,445,900, compared to $28,529,600 in the previous year's quarter. Franchise fees and royalty revenues contributed $338,000 compared to $22,700 in the 2005 quarter. Comparable restaurant sales for the 2006 fourth quarter as measured for restaurants in operation for more than 15 months recorded an aggregate 0.4% increase over the 2005 fourth quarter.
Revenues for the 2006 full year grew 8.3% to $126,889,400 from $117,180,500 in 2005. Company-owned restaurant revenues grew 7.7% for 2006 to $126,038,300, compared to $117,080,000 in the previous year. Franchise fees and royalty revenues contributed $851,000 compared to $100,500 in 2005. For the 2006 full year, comparable restaurant sales recorded an aggregate 0.3% increase over the previous year.
Così said that it expects its 2006 full year results to be a loss of $0.18 per share, excluding the effects of stock based compensation, as compared to a loss of $0.28 per share for 2005, excluding the effects of stock-based compensation expense.
Kevin Armstrong, Così's President and Chief Executive Officer, stated, "In the 2006 fourth quarter, Così's franchise revenues and corporate expenses were in line with market expectations, we met our company-owned development targets, and we made progress with our marketing initiatives. While we were encouraged by the improvement in comparable sales in the fourth quarter of 2006 as compared to the third quarter of 2006, comparable sales were still below our expectations. As a result, 2006 fourth quarter restaurant margin performance was below our expectations and previous year's fourth quarter, primarily because of flat comparable sales as well as higher planned marketing expenditures of approximately 100 basis points and 200 basis points as a percentage to sales in higher labor costs driven primarily by lower than expected revenue and higher manager complements in our current restaurant mix."
Armstrong also noted, "While we achieved our company-owned development goal of opening 21 locations in 2006, eleven company-owned locations that were open in the fourth quarter of 2005 were not in operation during the fourth quarter of 2006 resulting in a net addition of company-owned locations of ten."
Development Update
Così noted that it finished the year with a total of 123 locations. It opened 21 company-owned locations and eight franchised locations during 2006 including two company-owned locations that were refranchised in the fourth quarter. Five Federated Department Store (Macy's) locations were closed during the year, four locations in the first quarter and one location affected by Hurricane Wilma permanently closed in the third quarter. As of January 2, 2007 there were 110 company-owned locations and 13 franchise locations. 37 locations now employ the new generation design, which is proving that its enhanced service format in a tasteful contemporary environment creates high customer appeal, an improved operational design, and strong unit return economics.
The company added that it currently has secured commitments from 28 franchise area developers for 356 Così restaurant locations.
Outlook for 2007-2008
Cosi stated that it expects 2007 earnings before stock compensation expense to be in the range of $0.08 to $0.12 per share based on company-owned revenue ranging between $150 million to $155 million. Cosi expects franchise fees and royalties to contribute between $4 million to $5 million in 2007. Cosi also stated that it expects 2007 unit growth to consist of 14 new company-owned restaurants and between 45 to 55 new franchise locations.
For 2008, Cosi stated that it expects earnings before stock compensation expense to be in the range of $0.35 to $0.45 per share. Further, it expects company-owned revenue to be between $190 million to $205 million. Cosi expects franchise fees and royalties to contribute between $9 million to $10 million in 2008.
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