Champps (NASDAQ:CMPP)
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Champps Entertainment, Inc. (Nasdaq:CMPP) today announced results for
its fiscal 2007 first quarter ended October 1, 2006.
Total revenues for the first quarter decreased 4.3% to $49.3 million,
compared with revenues of $51.5 million for the first quarter last
fiscal year. Comparable same store sales decreased 3.9 percent for first
quarter 2007. Comparable alcohol sales decreased 2.0 percent, while
comparable food sales decreased 4.6 percent for the first quarter 2007.
Net loss for the first quarter 2007 was $42,000, or $0.00 loss per
diluted share, compared to net loss of $0.2 million, or $0.02 loss per
diluted share, in the same quarter last year. A discontinued operations
loss of $0.3 million (net of tax), or $0.03 loss per diluted share, was
recorded in last year’s first quarter.
“We found the macro-economic factors we
experienced in the first half of this calendar year carried over to this
last quarter and negatively influenced our sales. We also believe our
sales were negatively affected by increased competitor media advertising
and discounting,” noted Mike O’Donnell,
Champps’ Chairman, President, and Chief
Executive Officer. “These outside influences
aside, we are disappointed in our results this quarter as it is our job
to adjust and focus on increasing sales and controlling costs.”
O’Donnell added, “We
continue to believe the best way for us to meet our goals of increased
sales and profits is by concentrating on what we can positively
influence. We continue to focus on our initiatives and improving the
basics of our business so we can deliver superior experiences to our
customers that will ultimately translate into higher restaurant volumes
and profits. Specifically, we are continuing the roll-out of our new
cash flow partnership bonus plan, focusing on menu development and
product execution, and enhanced training programs including the roll-out
of our 'visioneering' culture based training program which communicates
our foundational ideas, principles and stakeholder commitments.
Additionally, we are working to return to growth in the future, with our
first new restaurant scheduled to open in September 2007 and we expect
to hire a new franchise development executive in the near future to
start growth in that area as well.”
Product costs increased to 29.1 percent of sales in the most recent
quarter from 28.1 percent of sales compared to the first quarter of the
last fiscal year reflecting higher produce and seafood costs. Labor
costs increased to 33.0 percent of sales from 32.7 percent of sales for
the same period last fiscal year primarily due to the de-leveraging
effect associated with lower sales. Other operating costs increased to
16.7 percent of sales in this year’s first
quarter from 15.0 percent of sales in the same quarter last year
primarily as a result of higher marketing costs and the lower average
sales. During the first quarter of fiscal 2007, approximately $0.3
million was spent on a radio marketing test in two markets. Occupancy
expense decreased to 10.0 percent of sales versus 10.5 percent of sales
in the first quarter last fiscal year because of reduced general and
property insurance costs. Depreciation and amortization expense was 5.3%
of revenues in both the first quarters of fiscal 2007 and 2006.
General and administrative expenses for the first quarter decreased to
$3.5 million, or 7.1 percent of revenues, compared to $3.7 million, or
7.2 percent of revenues, in the comparable period last fiscal year. This
decrease resulted from reduced support staff levels and compensation
expense for stock-based compensation partially offset by higher legal
costs related to litigation and higher tax costs.
Dave Womack, Chief Financial Officer, commented, “We
do not expect to open any new restaurants in fiscal 2007; however, we do
expect to return to modest growth in fiscal 2008. Our capital spending
for fiscal 2007 is expected to be between $4 to $6 million, which is
dependent on the level of new location capital spending related to
fiscal 2008 openings. During the first quarter of fiscal 2007, we
repurchased 100,000 common shares at a cost of $603,000.”
The Company's management will discuss the results of the first quarter
2007 on a conference call and simultaneous webcast on November 8, 2006,
at 10:00 a.m. ET. To hear the call in a listen-only mode, participants
must dial 877-497-1954 or 706-758-9642 (International) at least ten
minutes prior to the start of the call and refer to conference
identification number 9710594. To hear a live Web simulcast of the call,
visit the company's Web site at www.champps.com,
click on the Investor Relations icon and refer to conference
identification number 9710594.
If unable to participate at the time of the call, the archived webcast
can be accessed until December 8, 2006, by visiting www.champps.com,
clicking on the Investor Relations icon and referring to conference
identification number 9710594.
About Champps Entertainment, Inc.
Champps Entertainment, Inc. owns and operates 50 and franchises/licenses
13 Champps restaurants in 23 states. Champps, which competes in the
upscale casual dining segment, offers an extensive menu consisting of
freshly prepared food, coupled with exceptional service. Champps creates
an exciting environment through the use of videos, music, sports and
promotions.
Safe Harbor Statement
Certain statements made in this press release are forward-looking
statements based on management's current experience and expectations.
These forward-looking statements are made pursuant to the safe harbor
provisions of the Private Securities Litigation Reform Act of 1995. Such
statements involve certain risks and uncertainties that could cause
actual results to differ materially from those in the forward-looking
statements. Such forward-looking statements include statements regarding
our strategic initiatives; stock repurchase program; lease
renegotiations; impairment charges and closing of restaurants; new menu
and operating initiatives critical to improvement in same store sales;
the absence of new store openings in the remainder of fiscal 2007; and
future uses of cash for stock repurchases or exit costs, among others.
Among the factors that could cause future results to differ materially
from those provided in this press release are: the ability of the
Company to successfully implement our strategic initiatives to improve
same store sales; the ability to make and fund stock repurchases; the
ability to successfully close or renegotiate lease terms for certain
restaurants; the impact of intense competition in the casual dining
restaurant industry; the Company's ability to control restaurant
operating costs, which are impacted by commodity prices, minimum wage
and other employment laws; fuel and energy costs; consumer perceptions
of food safety; changes in consumer tastes and trends; and general
business and economic conditions. Information on significant potential
risks and uncertainties that may also cause such differences include,
but are not limited to, those mentioned by the Company from time to time
in its filings with the SEC. The words "may," "believe," "estimate,"
"expect," "plan," "intend," "project," "anticipate," "should" and
similar expressions and variations thereof identify certain of such
forward-looking statements, which speak only as of the dates on which
they were made. The Company undertakes no obligation to publicly update
or revise any forward-looking statements, whether as a result of new
information, future events, or otherwise. Readers are cautioned that any
such forward-looking statements are not guarantees of future performance
and involve risks and uncertainties, and, therefore, readers should not
place undue reliance on these forward-looking statements.
CHAMPPS ENTERTAINMENT, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
For the Three Months Ended October 1, 2006
(Dollars in thousands, except per share data)
(Unaudited)
Three Months Ended
October 1,
October 2,
2006
2005
Revenue
Sales
$ 49,135
$ 51,339
Franchising and royalty, net
180
137
Total revenue
49,315
51,476
Costs and expenses
Cost of sales and operating expenses
Product costs
14,287
14,451
Labor costs
16,238
16,763
Other operating expense
8,187
7,667
Occupancy
4,917
5,397
Pre-opening expense
-
9
General and administrative expense
3,515
3,691
Depreciation and amortization
2,604
2,723
Severance
(136)
100
Other (income) expense
19
59
Income (loss) from operations
(316)
616
Interest expense and income, net
267
333
Expenses related to predecessor companies
12
(3)
Income (loss) from continuing operations, before tax
(595)
286
Income tax expense (benefit)
(558)
175
Income (loss) from continuing operations
(37)
111
Loss on discontinued operations, net of tax
5
317
Net loss
$ (42)
$ (206)
Basic income (loss) per share:
Income (loss) from continuing operations
$ -
$ 0.01
Loss from discontinued operations, net of tax
-
(0.03)
Net loss
$ -
$ (0.02)
Diluted income (loss) per share:
Income (loss) from continuing operations
$ -
$ 0.01
Loss from discontinued operations, net of tax
-
(0.03)
Net loss
$ -
$ (0.02)
Basic weighted average shares outstanding
13,149
13,050
Diluted weighted average shares outstanding
13,149
13,120
CHAMPPS ENTERTAINMENT, INC.
Supplemental Information
(Stated as a percentage of restaurant sales)
(Unaudited)
Three Months Ended
October 1,
October 2,
2006
2005
Store weeks
650
650
Average weekly sales
75,592
78,983
Product costs
29.1%
28.1%
Labor costs
33.0%
32.7%
Other operating expenses
16.7%
15.0%
Occupancy
10.0%
10.5%
Pre-opening expenses
0.0%
0.0%
Total cost of sales and operating expenses
88.8%
86.3%
Depreciation and amortization
5.3%
5.3%
Total cost of sales, operating expenses and depreciation and
amortization
94.1%
91.6%
General and administrative expense
7.1%
7.2%
(Stated as a percentage of revenue)
Champps Entertainment, Inc.
Selected Balance Sheet Information
(In thousands)
(Unaudited)
October 1,
July 2,
2006
2006
Cash and cash equivalents
$ 7,742
$ 9,449
Current assets
23,531
24,869
Total assets
134,151
136,702
Current liabilities
11,300
13,377
Debt
14,757
14,707
Total shareholders' equity
76,291
76,728
Champps Entertainment, Inc.
Selected Cash Flow Information
(In thousands)
(Unaudited)
Three Months Ended
October 1,
October 2,
2006
2005
Net cash provided by (used in) operating activities
$ (277)
$ 485
Net cash used in investing activities
(857)
(1,280)
Net cash provided by (used in) financing activities
(573)
369
Net change in cash and cash equivalents
$ (1,707)
$ (426)
Champps Entertainment, Inc. (Nasdaq:CMPP) today announced results
for its fiscal 2007 first quarter ended October 1, 2006.
Total revenues for the first quarter decreased 4.3% to $49.3
million, compared with revenues of $51.5 million for the first quarter
last fiscal year. Comparable same store sales decreased 3.9 percent
for first quarter 2007. Comparable alcohol sales decreased 2.0
percent, while comparable food sales decreased 4.6 percent for the
first quarter 2007.
Net loss for the first quarter 2007 was $42,000, or $0.00 loss per
diluted share, compared to net loss of $0.2 million, or $0.02 loss per
diluted share, in the same quarter last year. A discontinued
operations loss of $0.3 million (net of tax), or $0.03 loss per
diluted share, was recorded in last year's first quarter.
"We found the macro-economic factors we experienced in the first
half of this calendar year carried over to this last quarter and
negatively influenced our sales. We also believe our sales were
negatively affected by increased competitor media advertising and
discounting," noted Mike O'Donnell, Champps' Chairman, President, and
Chief Executive Officer. "These outside influences aside, we are
disappointed in our results this quarter as it is our job to adjust
and focus on increasing sales and controlling costs."
O'Donnell added, "We continue to believe the best way for us to
meet our goals of increased sales and profits is by concentrating on
what we can positively influence. We continue to focus on our
initiatives and improving the basics of our business so we can deliver
superior experiences to our customers that will ultimately translate
into higher restaurant volumes and profits. Specifically, we are
continuing the roll-out of our new cash flow partnership bonus plan,
focusing on menu development and product execution, and enhanced
training programs including the roll-out of our 'visioneering' culture
based training program which communicates our foundational ideas,
principles and stakeholder commitments. Additionally, we are working
to return to growth in the future, with our first new restaurant
scheduled to open in September 2007 and we expect to hire a new
franchise development executive in the near future to start growth in
that area as well."
Product costs increased to 29.1 percent of sales in the most
recent quarter from 28.1 percent of sales compared to the first
quarter of the last fiscal year reflecting higher produce and seafood
costs. Labor costs increased to 33.0 percent of sales from 32.7
percent of sales for the same period last fiscal year primarily due to
the de-leveraging effect associated with lower sales. Other operating
costs increased to 16.7 percent of sales in this year's first quarter
from 15.0 percent of sales in the same quarter last year primarily as
a result of higher marketing costs and the lower average sales. During
the first quarter of fiscal 2007, approximately $0.3 million was spent
on a radio marketing test in two markets. Occupancy expense decreased
to 10.0 percent of sales versus 10.5 percent of sales in the first
quarter last fiscal year because of reduced general and property
insurance costs. Depreciation and amortization expense was 5.3% of
revenues in both the first quarters of fiscal 2007 and 2006.
General and administrative expenses for the first quarter
decreased to $3.5 million, or 7.1 percent of revenues, compared to
$3.7 million, or 7.2 percent of revenues, in the comparable period
last fiscal year. This decrease resulted from reduced support staff
levels and compensation expense for stock-based compensation partially
offset by higher legal costs related to litigation and higher tax
costs.
Dave Womack, Chief Financial Officer, commented, "We do not expect
to open any new restaurants in fiscal 2007; however, we do expect to
return to modest growth in fiscal 2008. Our capital spending for
fiscal 2007 is expected to be between $4 to $6 million, which is
dependent on the level of new location capital spending related to
fiscal 2008 openings. During the first quarter of fiscal 2007, we
repurchased 100,000 common shares at a cost of $603,000."
The Company's management will discuss the results of the first
quarter 2007 on a conference call and simultaneous webcast on November
8, 2006, at 10:00 a.m. ET. To hear the call in a listen-only mode,
participants must dial 877-497-1954 or 706-758-9642 (International) at
least ten minutes prior to the start of the call and refer to
conference identification number 9710594. To hear a live Web simulcast
of the call, visit the company's Web site at www.champps.com, click on
the Investor Relations icon and refer to conference identification
number 9710594.
If unable to participate at the time of the call, the archived
webcast can be accessed until December 8, 2006, by visiting
www.champps.com, clicking on the Investor Relations icon and referring
to conference identification number 9710594.
About Champps Entertainment, Inc.
Champps Entertainment, Inc. owns and operates 50 and
franchises/licenses 13 Champps restaurants in 23 states. Champps,
which competes in the upscale casual dining segment, offers an
extensive menu consisting of freshly prepared food, coupled with
exceptional service. Champps creates an exciting environment through
the use of videos, music, sports and promotions.
Safe Harbor Statement
Certain statements made in this press release are forward-looking
statements based on management's current experience and expectations.
These forward-looking statements are made pursuant to the safe harbor
provisions of the Private Securities Litigation Reform Act of 1995.
Such statements involve certain risks and uncertainties that could
cause actual results to differ materially from those in the
forward-looking statements. Such forward-looking statements include
statements regarding our strategic initiatives; stock repurchase
program; lease renegotiations; impairment charges and closing of
restaurants; new menu and operating initiatives critical to
improvement in same store sales; the absence of new store openings in
the remainder of fiscal 2007; and future uses of cash for stock
repurchases or exit costs, among others. Among the factors that could
cause future results to differ materially from those provided in this
press release are: the ability of the Company to successfully
implement our strategic initiatives to improve same store sales; the
ability to make and fund stock repurchases; the ability to
successfully close or renegotiate lease terms for certain restaurants;
the impact of intense competition in the casual dining restaurant
industry; the Company's ability to control restaurant operating costs,
which are impacted by commodity prices, minimum wage and other
employment laws; fuel and energy costs; consumer perceptions of food
safety; changes in consumer tastes and trends; and general business
and economic conditions. Information on significant potential risks
and uncertainties that may also cause such differences include, but
are not limited to, those mentioned by the Company from time to time
in its filings with the SEC. The words "may," "believe," "estimate,"
"expect," "plan," "intend," "project," "anticipate," "should" and
similar expressions and variations thereof identify certain of such
forward-looking statements, which speak only as of the dates on which
they were made. The Company undertakes no obligation to publicly
update or revise any forward-looking statements, whether as a result
of new information, future events, or otherwise. Readers are cautioned
that any such forward-looking statements are not guarantees of future
performance and involve risks and uncertainties, and, therefore,
readers should not place undue reliance on these forward-looking
statements.
-0-
*T
CHAMPPS ENTERTAINMENT, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
For the Three Months Ended October 1, 2006
(Dollars in thousands, except per share data)
(Unaudited)
Three Months Ended
---------------------
October 1, October 2,
2006 2005
---------- ----------
Revenue
Sales $49,135 $51,339
Franchising and royalty, net 180 137
---------- ----------
Total revenue 49,315 51,476
---------- ----------
Costs and expenses
Cost of sales and operating expenses
Product costs 14,287 14,451
Labor costs 16,238 16,763
Other operating expense 8,187 7,667
Occupancy 4,917 5,397
Pre-opening expense - 9
General and administrative expense 3,515 3,691
Depreciation and amortization 2,604 2,723
Severance (136) 100
Other (income) expense 19 59
---------- ----------
Income (loss) from operations (316) 616
Interest expense and income, net 267 333
Expenses related to predecessor companies 12 (3)
---------- ----------
Income (loss) from continuing operations, before
tax (595) 286
Income tax expense (benefit) (558) 175
---------- ----------
Income (loss) from continuing operations (37) 111
Loss on discontinued operations, net of tax 5 317
---------- ----------
Net loss $(42) $(206)
========== ==========
Basic income (loss) per share:
Income (loss) from continuing operations $- $0.01
Loss from discontinued operations, net of tax - (0.03)
---------- ----------
Net loss $- $(0.02)
========== ==========
Diluted income (loss) per share:
Income (loss) from continuing operations $- $0.01
Loss from discontinued operations, net of tax - (0.03)
---------- ----------
Net loss $- $(0.02)
========== ==========
Basic weighted average shares outstanding 13,149 13,050
Diluted weighted average shares outstanding 13,149 13,120
*T
-0-
*T
CHAMPPS ENTERTAINMENT, INC.
Supplemental Information
(Stated as a percentage of restaurant sales)
(Unaudited)
Three Months Ended
---------------------
October 1, October 2,
2006 2005
---------- ----------
Store weeks 650 650
Average weekly sales 75,592 78,983
Product costs 29.1% 28.1%
Labor costs 33.0% 32.7%
Other operating expenses 16.7% 15.0%
Occupancy 10.0% 10.5%
Pre-opening expenses 0.0% 0.0%
---------- ----------
Total cost of sales and operating expenses 88.8% 86.3%
Depreciation and amortization 5.3% 5.3%
Total cost of sales, operating expenses and
depreciation and amortization 94.1% 91.6%
---------- ----------
General and administrative expense 7.1% 7.2%
---------- ----------
(Stated as a percentage of revenue)
*T
-0-
*T
Champps Entertainment, Inc.
Selected Balance Sheet Information
(In thousands)
(Unaudited)
October 1, July 2,
2006 2006
---------- --------
Cash and cash equivalents $7,742 $9,449
Current assets 23,531 24,869
Total assets 134,151 136,702
Current liabilities 11,300 13,377
Debt 14,757 14,707
Total shareholders' equity 76,291 76,728
*T
-0-
*T
Champps Entertainment, Inc.
Selected Cash Flow Information
(In thousands)
(Unaudited)
Three Months Ended
---------------------
October 1, October 2,
2006 2005
---------- ----------
Net cash provided by (used in) operating
activities $(277) $485
Net cash used in investing activities (857) (1,280)
Net cash provided by (used in) financing
activities (573) 369
---------- ----------
Net change in cash and cash equivalents $(1,707) $(426)
========== ==========
*T