Lower CKE Profits Still Beat Wall Street Expectations

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CKE Restaurants Inc. on Wednesday reported better-than-expected fiscal first quarter earnings. The operator of the Carl’s Jr and Hardee’s fast-food chains said cost cutting helped minimize the decrease in net income despite declining sales in the poor economy.

After the markets closed, the Carpinteria company reported net income of $14.4 million (26 cents per share) for the quarter ended May 18, compared with net income of $16.6 million (31 cents) a year ago. Revenue fell 4 percent to $446.8 million.

Sales at Carl’s Jr restaurants open at least 13 months fell 5 percent, while sales at established Hardee’s outlets rose 2.5 percent during the quarter.

Excluding mark-to-market adjustments and one-time items, the company’s profit was 29 cents per share. Analysts surveyed by Thomson Reuters on average were expecting 25 cents per share.

Chief Executive Andrew F. Puzder noted that the CKE held margins flat at company-operated restaurants and increased operating income, despite a 1.8 percent decrease in company-operated same-store sales during the quarter.

“Holding operating income and company-operated restaurant-level margin steady in this economy and doing so while facing the heavy discounting taking place in the fast food and casual dining sectors, as well as increased depreciation expense due to our remodeling programs at both brands, is a testament to our management team and the strength of our brands,” Puzder said in a statement.

CKE shares closed up 18 cents, or 2 percent, to $8.70 on the New York Stock Exchange, and rose 7.6 percent in after-hours trading.

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