Brinker Swings To 3Q Profit Despite Weak Sales; Margins Up

   DOW JONES NEWSWIRES 
 

Brinker International Inc. (EAT) reversed a year-earlier loss in its fiscal third quarter caused by the write-down of the Macaroni Grill restaurant chain, as margins rose amid the company's cost-cutting.

Shares fell 1.4% in premarket trading Tuesday to $18.03. The stock price has more than quadrupled since it hit a 17-year low in November.

Casual-dining operators have been shedding expenses to balance declining traffic and are offering more value deals to lure customers. However, even those who are eating out have cut back on extras, such as appetizers, drinks and desserts, companies say.

For the quarter ended March 25, the operator of Chili's Grill & Bar and other restaurant chains reported net income of $35 million, or 34 cents a share, compared with a year-earlier net loss of $38.8 million, or 38 cents a share, a year earlier. Excluding items, including the write-down, earnings rose to 45 cents a share from 33 cents. Earlier this month, Brinker predicted 44 cents to 45 cents a share, above analysts' then-estimates.

Revenue dropped 20% to $857.4 million. Analysts most-recently estimated revenue of $864.6 million, according to a poll by Thomson Reuters.

Gross margin rose to 62.1% from 61.1%.

Brinker previously reported same-store sales for the quarter fell 5.6%, including a 5.2% decline at Chili's, and 5% and 9.5% drops, respectively, at On The Border and Maggiano's locations.

-By Katherine E. Wegert and Kathy Shwiff, Dow Jones Newswires; 201-938-5975; [e-mail]