Brinker Doubles Profits on Maggiano's

DALLAS ( TheStreet) -- Brinker International ( EAT) topped Wall Street's expectations with higher profits in its fiscal second quarter thanks to strength at its Maggiano's Little Italy Restaurants.

Brinker said early Tuesday that its net quarterly profits more than doubled to $37.5 million, or 41 cents per share, compared with year-earlier earnings of $18.3 million, or 18 cents per share.


Excluding one-time items related to Brinker's income tax rate and one less reporting week in fiscal 2011 than in the prior year, profits would have come in at 38 cents per share, a 52% jump compared with 25 cents adjusted earnings per share in the fiscal second quarter last year.

Revenue fell 4.8% to $671.9 million, from $705.5 million in the year-earlier period.

Analysts' consensus call had been for Brinker to book earnings of $30 million, or 32 cents per share, on revenue of $670.2 million.

Brinker shares jumped 5.3% in the first minutes of trading Tuesday.

Brinker said systemwide comparable same-store sales -- or sales at stores open at least one year, a closely watched metric in the restaurant industry -- decreased 3.7% in the recent quarter, compared with a 3.6% decline in the year-earlier period. Comps at company-owned Chili's restaurants fell 4.9% while Maggiano's saw a gain of 4.7%.

Quarterly revenue at Chili's fell 7.4% to $548.3 million, attributed in part to a 3.1% net capacity decline reflecting the sale of 21 restaurants to a franchisee in December 2009 and ten restaurant closures since the 2010 fiscal second quarter.

Strength at Brinker's Maggiano's chain was attributed to improved customer traffic.

Elsewhere in the restaurant sector, McDonald's ( MCD) reported mixed fourth-quarter results early Monday morning.

McDonald's said it booked a 1.6% increase in fourth-quarter profits to $1.24 billion, or $1.16 per share. Revenue came in 4% higher year-over-year at $6.21 billion.

Excluding one-time items related to a license transaction in Latin America, adjusted earnings-per-share were $1.15, a penny below consensus estimates, and adjusted income was $1.22 billion, also below expectations.

McDonald's shares were 0.2% higher Tuesday morning after adding 0.5% in Monday's session.

" McDonald's results are not as impressive as a lot of people have been used to," noted RBC Capital Markets analyst Larry Miller. "We knew that weather was hurting them," he added, referring to adverse weather across the U.S. and in parts of Europe that hurt December sales.

McDonald's reported that global comps increased 5%, including 4.4% growth in the U.S., 3.4% in Europe and 5.5% in Asia/Pacific, Middle East and Africa (APMEA).

"China is a major focus and the stock has a potential longer-term to have a higher multiple as the China story unfolds, similar to what Yum! Brands ( YUM) has benefited from in the last couple of years," Oppenheimer analyst Matthew DiFrisco said in appearance on CNBC.

Like food and beverage peers Yum! and Starbucks ( SBUX), McDonald's has been looking overseas for growth.

McDonalds

McDonald's said in December it plans to grow its presence in China by 40% next year, opening 200 new stores in the country over the next three years.

-- Written by Miriam Marcus Reimer in New York.

>To contact the writer of this article, click here: Miriam Reimer.

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