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Restaurant Brands' second-quarter sales fall 6.5%

Tuesday 20th September 2011

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Restaurant Brands NZ, the fast food franchise operator, reported a 6.5% drop in second-quarter sales on the weaker retail environment, the impact of the Christchurch earthquakes and continued store closures. The shares fell 1.3%.

Total sales for the 16 weeks ended Sept. 12 fell 6.5% to $93.9 million, the Auckland-based retailer said in a statement today. Same-store sales were down 4.5%. The company said it expects a pick-up in second-half earnings and will provide full-year guidance with its interim results on Oct. 19

"Restaurant Brands has not been exempt from the effects of continued negative consumer sentiment and a weak retail environment that has been evident since the increase in the GST rate last October," said chief executive Russell Creedy.

In the second half the company expects “higher levels of consumer confidence and better retail sales with the stimulation of the Rugby World Cup and improving general economic conditions," he said.

The second quarter sales were hurt by the Feb. 22 earthquake in Christchurch, with only one of its five stores in the city having reopened since the disaster, denting sales by about $1.3 million. The effect on the bottom line would be offset by material damage and business interruption insurance.

Sales at the company's flagship KFC stores fell 0.9% to $72.1 million, reflecting Christchurch store closures, as well as refurbishments. Same-store sales fell by 3.5%.

The company's Pizza Hut stores continued to struggle to find traction in the second quarter, with total sales falling 27% to $14 million, reflecting the sale of 11 stores to independent franchisees and 3 closures. Same-store sales fell 13.5%.

Second quarter sales at the company's Starbucks outlets fell 8.3% to $7.8 million, with revenue impacted by four store closures. Same-store sales rose 6.2%.

Restaurant Brands' shares, which were one of the best performers on the NZX last year, recently traded at $2.21, and have declined 16% in value since Jan. 1.


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