Charlotte-based Bojangles’ on Tuesday reported earnings that topped Wall Street expectations, and the results sent the company’s shares surging more than 8 percent.
Bojangles’ better-than-expected report came a day after the company announced the departure of Clifton Rutledge as CEO. Head of the company since early 2014, Rutledge said he was stepping down to spend more time with his family.
Since going public three years ago, the company’s financial results have disappointed investors. But on Tuesday the company laid out several areas where it is looking to improve as it continues to grow its footprint.
The chicken-and biscuits chain reported fourth-quarter earnings of $48.8 million, or 23 cents a share, adjusted for pretax gain. That’s above the estimate from analysts surveyed by Zacks Investment Research, who called for earnings of 18 cents a share. Sales for the quarter rose 6.2 percent to $148.1 million, above the Wall Street estimate of $146.5 million.
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But Bojangles’ said that same-store sales, a key metric used to gauge a retailer’s health, declined 3.1 percent over the quarter. In 2017, same-store sales fell 2.1 percent company-wide.
Bojangles’ “recent underperformance” prompted investment group CL King to posit earlier this year whether the company could be an acquisition target. The company’s stock price is down more than 27 percent from its IPO price of $19, falling more than 36 percent in 2017.
During a call with analysts Tuesday, Bojangles’ executives laid out several areas in which the company is looking to improve in the coming year.
Bojangles’ said it will slow down growth of company-owned stores and rather focus on opening stores owned by franchisees, which experts say is less risky for restaurant chains, and re-franchising company-owned stores.
After all, even though same-store sales decreased across the board, they declined less in franchise-operated locations, the company said. Executives added that breakfast was its best-performing meal of the day.
Customers can expect openings to take place in Bojangles’ existing markets or in places such as Georgia where it has “much more brand recognition,” executives said.
Bojangles’ said that its store remodels last year cost way too much, and that the company didn’t get the return that was expected. In Charlotte, the company remodeled three locations with features such as Wi-Fi, a biscuit-making theater and updated decor. The chain will instead focus on a “smaller-scale remodel” effort.
Another factor weighing on the company’s performance recently was turnover, and interim CEO Randy Kibler said one way to reduce that problem is by hiring more full-time employees. Kibler noted that chicken is marinated at Bojangles’ restaurants, sweet tea is steeped on site and biscuits are baked by hand.
“As a result of that, turnover has a bigger impact on us (than some of our competitors),” Kibler said.