COLUMBUS: Bob Evans Farms Inc.’s profit and revenue fell in the second quarter as the restaurant and packaged-food company said it remains in the “early innings of its turnaround.”
Shares, down 22% this year, fell 5% to $37.90 in late trading.
On Tuesday, the company adjusted its projections for the year saying it expects net sales of about $1.35 billion, compared with its earlier view of sales of $1.33 billion to $1.39 billion, with sales at restaurants open for at least 1 1/2 years expected to decline 1% to 2.5%. The company had previously projected comparable sales to improve 1% to 2%.
On a per-share basis, Bob Evans affirmed its adjusted profit projection of $1.85 to $2.
The company, which has been under pressure from billionaire investor Thomas Sandell, sold two of its BEF Foods properties in Lima, Ohio, and Sulphur Springs, Texas, last month for $51.6 million. Under the terms of the deal, BEB Foods will lease the plants for an initial 20-year term.
Bob Evans is also pursuing similar sell and lease-back deals for its New Albany, Ohio, headquarters and about $200 million worth of its restaurant real estate.
Mr. Sandell, a former Bear Stearns trader who had launched a proxy fight and won a third of the company’s 12 board seats, had pushed for the company to separate its food and restaurant businesses. The foods division makes and distributes pork sausage and other refrigerated and frozen foods.
This month, Bob Evans hired restaurant industry veteran Saed Mohseni as chief executive. Mr. Mohseni, slated to take the helm in January, indicated he would like to see the Bob Evans brand expand nationally.
Most of Bob Evans’s restaurants are in the Midwest, mid-Atlantic and Southeast.
In the latest quarter, its restaurant segment reported sales of $230.7 million, a 4.3% decline from the year earlier, while sales at established restaurants declined 3.2%. The company had projected sales at established restaurants to remain flat or increase in the low-single digits from the year earlier.
Net sales at its prepared-foods business rose 2.3% to $94.3 million.
For the period ended Oct. 23, Bob Evans reported a profit of $6.4 million, or 29 cents a share, compared with $6 million, or 25 cents a share, a year earlier. Excluding certain items, profit rose to 41 cents from 36 cents a share a year earlier.
Net sales declined 2.5% to $325 million.
Analysts surveyed by Thomson Reuters had projected a profit of 39 cents a share on $323.4 million in revenue.
Gross margin improved to 68.4% from 65.2% a year earlier.
Going forward, company executives said they intend to move away from discounts, which they had used in the past to attract customers; improve menu offerings; and shift marketing spending from broadcast media to local and digital media.
