Updated from 10:28 a.m. EDT
While Wall Street had anticipated the fourth-quarter loss reported Tuesday by
, shares of the newly public fast-food chain sank after weaker-than-expected same-store sales inflamed concerns about consumer spending.
Payments related to Burger King's IPO in May, along with other restructuring charges, pulled the company into the red for the fiscal fourth quarter. The company posted a loss of $9 million, or 7 cents a share, for the period ended June 30, compared with the profit of $2 million, or 2 cents a share, it recorded a year earlier.
The results included a one-time "management termination fee" of $30 million. The company had agreed to pay the fee after the IPO to terminate management agreements with its former owners, private equity funds Texas Pacific Group, Bain Capital and Goldman Sachs Funds, according to regulatory filings.
The No. 2 U.S. burger chain, behind
, said fourth-quarter revenue rose 6% to $533 million, in line with Thomson First Call's average analyst estimate. Burger King also posted its ninth straight quarter of positive comps, or sales at restaurants open for at least 13 months, with a gain of 2%.
Investors had expected comps of more than 4%, according to a J.P. Morgan note, after the company recorded 4.9% growth for its third quarter. The 2% increase came on top of a 1.2% comp in the same quarter last year, but on a conference call with analysts, Burger King CEO John Chidsey pointed to the 7.9% comp it posted in the fourth quarter of 2004 as a high hurdle that it has managed to clear for two years in a row.
"We're climbing some really high mountains on a two-year basis," said Chidsey. "The fact that we continue to improve comps is a testament to the power of the brand and the health of the business."
Meanwhile, sales in Europe, the Middle East and Asia/Pacific rose by only 0.2%. By comparison, McDonald's posted a 5.5% jump in comparable sales for its recently ended quarter, with a 6.3% increase in Europe. Its CEO, Jim Skinner, said its business is holding up, but he warned that things could slow down due to pressures on consumer spending.
also saw U.S. sales weakness in the second quarter and reported disappointing results at its Taco Bell and KFC restaurants.
Shares of Burger King recently were trading down $1.86, or 12%, to $13.39. The selloff continued a steady decline in the fast-food chain's stock price since it went public at $17 a share. On its inaugural day of trading three months ago, the shares rose 3% to close at $17.50 in what was widely regarded as a fizzle in an IPO market that had recently been hot for restaurant stocks like
Chipotle Mexican Grill
Since then, Burger King's stock is down 25%, as investors have worried that low-income consumers struggling with rising interest rates and high gas prices will cut down on their intake of burgers and fries.
"We continue to see people trading down from casual dining restaurants to
fast food chains," said Chidsey.
He said in a press release that the company's value menu is performing above expectations, which "is especially relevant in today's economy as consumers are being more cautious with their nonessential spending."
For 2007, Burger King said it expects revenue to rise 6% to 7% as it opens more locations. Currently, it has more than 11,100 restaurants around the world, most of which are owned and operated by franchisees. It plans to open more than 430 restaurants in fiscal 2007, with 250 of those in Europe, the Middle East and Asia Pacific.