Jack in the Box
cut its previous fourth-quarter forecast in half due to lessening sales, a one-time cost from a legal dispute and costs associated with closing underperforming restaurants.
The shares were falling 11.5% to $24.06.
Including the costs and slow sales, the company now expects to earn $13.6 million, or 34 cents a share, down from its original prediction of 67 cents a share. In last year's quarter, the company earned $20.7 million, or 52 cents a share. For the year, the company expects to earn $2.06 a share, consistent with last year's earnings.
Before the two charges, the company expects to earn $23.9 million, or 60 cents a share, which is up 15% from last year's 52 cents a share. For the year, the company expects to earn $2.32 a share, up 10% from last year's $2.11 a share. Analysts have predicted the company will earn 50 cents a share for the quarter and $2.50 a share for the year.
At restaurants open more than a year, the company expects sales to drop 3% compared with the 3.8% gain last year. Total sales are expected to be $423 million, compared with $411 million from last year.
The one-time legal dispute cost refers to a tentative settlement with management personnel from a California Jack in the Box restaurant, alleging the company did not properly pay overtime. The settlement, including legal fees, is expected to cost the company $9.5 million.
The San Diego-based company also closed eight underperforming restaurants, taking a one-time charge of $6.1 million.
Jack in the Box cited the weakened economy and a slow-to-catch-on marketing campaign as other reasons for the sluggish fourth-quarter results.