P.F. Chang's 4th-Q profit falls 5.5% despite large revs jump

Nation's Restaurant News,  Feb 26, 2007  by Sarah E. Lockyer

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Scottsdale, Ariz. -- A difficult sales environment for casual dinnerhouses compounded by increased expenses pushed P.F. Chang's fourth-quarter profit down 5.5 percent from a year earlier.

The company said equity-based compensation expense and increased costs eroded a revenue surge of 17.9 percent to $252 million, which was helped by 21 store openings during the quarter. In addition, same-store sales declines of 0.9 percent at the company's namesake concept and 0.7 percent at its Pei Wei Asian Diner brand did not provide the needed sales leverage to post improved profit.

Still, P.F. Chang's per-share, fourth-quarter earnings beat average Wall Street estimates, and the company's fiscal 2007 outlook was better than expected, sending the company's stock price to a nine-month high during trading Feb. 14, the day results were announced.

For the quarter ended Dec. 31, P.F. Chang's earned $8.8 million, down from profit of $9.3 million in the year-earlier fourth quarter. Per-share earnings totaled 34 cents for both quarters, as the number of shares outstanding was 4.3 percent lower in the latest quarter.

The company, which operates or franchises 260 restaurants under its namesake chain and its Pei Wei concept, booked accounting charges of $1.9 million in its latest quarter for stock-based compensation and preopening expenses.

For the full year, P.F. Chang's earned $33.3 million, or $1.24 per share, down from year-earlier profit of $37.8 million, or $1.40 per share. Revenues for fiscal 2006 rose 15.9 percent from a year earlier to $937.6 million. Same-store sales fell 0.3 percent at the company's bistro chain and dropped 2 percent at Pei Wei.

The company said it expects to record a 19-percent jump in fiscal 2007 revenues to $1.1 billion, and a 17-percent increase in per-share earnings to $1.45 per share.