Famous Dave’s of America Wednesday posted a fourth- quarter loss on plummeting sales, its third consecutive quarterly drubbing after a turnaround attempt blew up last year.
Still, Famous Dave’s new CEO says that the latest turnaround attempt — this one basically undoing the last one — is showing signs of progress.
The troubled Minnetonka-based restaurant chain reported a net loss of $307,000 or 5 cents per basic share from continuing operations, which included gains from the sale of real estate from a closed restaurant. For the same quarter last year, Dave’s had a net loss of 34 cents per share or $2.5 million, which included a $3.9 million impairment charge.
The company’s adjusted net loss from continuing operations was 8 cents for the fourth quarter, compared to zero cents a year ago and analysts’ expectations of an 11 cent loss. Famous Dave’s sales for the quarter tallied $25.4 million down, 15 percent from a year ago.
Comparable store sales, which take into account recently opened and closed stores, fell 10.6 percent for company-owned restaurants and 5.2 percent at franchised outlets, worse than analysts were expecting. “Same-store sales were pretty rough,” said Mark Smith, a stock analyst at Feltl and Co.
Famous Dave’s, which has almost 180 restaurants in 33 states, has spent much of the last year in turmoil. Its stock has dropped from around $30 in April to just north of $6 these days.
Former CEO Ed Rensi, who had been hired to breathe life into the slumbering company, abruptly exited in June after a little more than a year at the helm. Rensi had undertaken a major overhaul of Famous Dave’s, particularly its menu. But after he left, board member and interim CEO Adam Wright lambasted Rensi for everything from introducing smaller portions to dropping classic menu items like cornbread — changes that turned away loyal customers.
Wright, appointed full-time CEO in December, acknowledged in a conference call with analysts Wednesday that the company’s results were disappointing. But he said “there are signs of encouragement.”
He noted that several menu items that had been axed by Rensi were back in stores in January, including “Firecracker” green beans, a brisket burger and a Cajun chicken sandwich.
Smith said Dave’s has returned to its core menu. “If you went into a [Famous Dave’s] restaurant today, it would be like going into a restaurant two years ago, which I think is a good thing,” he said.
One other positive note: Dave’s balance sheet — its cash and debt positions — “looked in pretty decent shape,” Smith said. The company noted Wednesday that it’s in compliance with all of its debt covenants, after running afoul of one last year.
Famous Dave’s earnings were released after the stock market closed. In after hours trading, the stock was at $6.01, down 14 cents.