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CKE Restaurants, Inc. Reports Positive Period Six Blended Same-Store Sales

Posted on: Tuesday, 24 July 2007, 09:23 CDT

CARPINTERIA, Calif., July 24 /PRNewswire-FirstCall/ -- CKE Restaurants, Inc. announced today period six same-store sales for the four weeks ended July 16, 2007, for Carl's Jr.(R) and Hardee's(R).

Brand Period 6 Year to Date FY 2008 FY 2007 FY 2008 FY 2007 Carl's Jr. +3.1% +3.4% +1.0% +5.1% Hardee's +1.1% +2.9% +1.8% +5.0% Blended +2.1% +3.2% +1.4% +5.0%

Commenting on the Company's performance, Andrew F. Puzder, president and chief executive officer, said, "We are pleased to report positive blended same-store sales for period six, as well as our 21st consecutive period of positive sales for Hardee's. We believe these sales gains are the result of our innovative premium product strategy supported by our cutting-edge advertising and our superior customer service. Despite some difficult comparisons over the coming periods, we believe that our continued focus on premium products and customer service initiatives combined with our remodel and dual-branding programs should contribute to sales in the near- and long- term."

"Carl's Jr. featured the Teriyaki Burger(TM) during period six. The sandwich features an all-beef, charbroiled patty that includes the traditional burger toppings, teriyaki sauce, melting Swiss cheese, and a juicy slice of DOLE(R) pineapple that has been grilled on the chain's signature charbroilers. Carl's Jr. also promoted its latest flavor variety of its Hand-Scooped Ice Cream Shakes & Malts(TM) lineup -- Orangesicle(TM) and promoted the Breakfast Club Sandwich(TM) during the breakfast daypart," said Puzder.

"On a two-year cumulative basis, same-store sales at Carl's Jr. have increased approximately six and a half percent. Average unit volumes for period six were higher than any comparable period six ever." Revenue for period six from company-operated Carl's Jr. restaurants (exclusive of franchise-related revenue and royalties) was approximately $46.3 million.

"At Hardee's, the Patty Melt Thickburger(TM) was featured and received media support for the entire period. The chain's authentic take on this American classic features a 1/3-pound Angus beef patty topped with grilled onions and melted American cheese between two slices of real grilled rye bread. In addition, the brand also promoted the Breakfast Club Sandwich(TM) during the breakfast daypart," Puzder continued. "Because the great majority of Hardee's restaurants are located in the Midwest and Southeast, it was disproportionately impacted by a large number of thunderstorms during the period. Absent these storms, Hardee's same store sales would have been more consistent with its year-to-date trend."

"On a two-year cumulative basis, Hardee's same-store sales have increased about four percent. In addition, Hardee's period six average unit volume was higher than any comparable period six since 1994, which is as far back as we can check." Revenue for period six from company-operated Hardee's restaurants (exclusive of franchise-related revenue and royalties) was approximately $49.4 million.

For period six, consolidated revenue from company-operated restaurants (exclusive of all franchise-related revenue and royalties) was approximately as follows:

Carl's Jr. $ 46.3 million Hardee's $ 49.4 million Total $ 95.7 million Second Quarter Cost Trends

"While we do not give specific earnings guidance, a number of individuals have requested that we provide information with respect to trends we see in our business and, in particular, with respect to operating expenses. While we will attempt to give limited guidance with respect to certain trends, investors should be aware that we are not attempting to cover all material issues concerning trends in our business and that there may be other material trends which could adversely or positively impact operating expenses or our business in general."

"We are experiencing an increase in food costs due primarily to increased commodity costs. As we stated in our first quarter fiscal 2008 earnings release and conference call, we are seeing increased beef costs, as well as increased pork, oils and cheese costs over the summer months, which are adversely impacting food costs at both brands, particularly Hardee's. Fortunately, we do not expect our Carl's Jr. distribution center relocation to have a material impact on our second quarter food and packaging costs. Nonetheless, we anticipate second quarter food costs as a percent of company- operated revenue will be higher than the prior year quarter and higher than the results reported for the first quarter of fiscal 2008."

"Second quarter labor costs, as a percent of company-operated revenue are expected to remain in line with, or only slightly above, the prior year quarter despite minimum wage increases in many of the states where we operate as well as an increase in the federal minimum wage rate which goes into effect today."

"We continue to see an impact to occupancy expense at Carl's Jr. primarily due to consumer price index (CPI) based rent increases and higher depreciation due to our new point of sale (POS) system. The CPI increases are having a greater percentage impact this year due to last year's sale of our Oklahoma market, which had a high percentage of owned properties. The new POS software was necessary both to support our existing business and our growth plans. We believe it will have a positive impact to margins over time. We anticipate consolidated occupancy costs for the second quarter will be higher than the prior year quarter as a percent of company-operated revenue and will experience a similar rate of increase sequentially that we recorded between the first and second quarter of fiscal 2007."

"As we stated in the most recent version of our investor presentation, we recovered $2 million in previously unrecognized royalties from past due Hardee's franchisees in the prior year quarter that we do not anticipate to recur this year. We expect the net impact of other changes in franchised and licensed restaurants revenue and expenses to have a nominal impact on comparisons with the prior year quarter."

Same-store sales results for period seven of fiscal year 2008, ending Aug. 13, 2007, will be reported on or about Aug. 22, 2007.

As of the end of its fiscal 2008 first quarter ended May 21, 2007, CKE Restaurants, Inc., through its subsidiaries, had a total of 3,022 franchised, licensed or company-operated restaurants in 43 states and in 13 countries, including 1,101 Carl's Jr. restaurants and 1,905 Hardee's restaurants.

SAFE HARBOR DISCLOSURE

Matters discussed in this news release contain forward-looking statements relating to future plans and developments, financial goals and operating performance that are based on management's current beliefs and assumptions. Such statements are subject to risks and uncertainties that are often difficult to predict, are beyond the Company's control and which may cause results to differ materially from expectations. Factors that could cause the Company's results to differ materially from those described include, but are not limited to, whether or not restaurants will be closed and the number of restaurant closures, consumers' concerns or adverse publicity regarding the Company's products, the effectiveness of operating initiatives and advertising and promotional efforts (particularly at the Hardee's brand), changes in economic conditions or prevailing interest rates, changes in the price or availability of commodities, availability and cost of energy, workers' compensation and general liability premiums and claims experience, changes in the Company's suppliers' ability to provide quality and timely products to the Company, delays in opening new restaurants or completing remodels, severe weather conditions, the operational and financial success of the Company's franchisees, franchisees' willingness to participate in the Company's strategies, the availability of financing for the Company and its franchisees, unfavorable outcomes in litigation, changes in accounting policies and practices, effectiveness of internal controls over financial reporting, new legislation or government regulation (including environmental laws), the availability of suitable locations and terms for the sites designated for development, and other factors as discussed in the Company's filings with the Securities and Exchange Commission.

Forward-looking statements speak only as of the date they are made. The Company undertakes no obligation to publicly update or revise any forward- looking statement, whether as a result of new information, future events or otherwise, except as required by law or the rules of the New York Stock Exchange.

CKE Restaurants, Inc.

CONTACT: John Beisler, Vice President - Investor Relations of CKERestaurants, Inc., +1-805-745-7750

Web site: http://www.ckr.com/

Source: PRNewswire-FirstCall

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