Bob Evans net income fell 46 percent to $6.1 million, or 23 cents a diluted share, from $11.3 million, or 51 cents a diluted share, in the same quarter a year ago. Net sales grew less than 1 percent to $332.6 million from $329.6 million over the same period.
December 4, 2013
Higher-than-expected pork prices played havoc with Bob Evans Farms' profit in the company's fiscal second quarter.
So did the costs of several projects, such as a new workforce management system and new manufacturing lines at two side-dish manufacturing plants, which combined in the quarter and eventually should make the New Albany-based restaurant and food-service company more efficient.
In all, Bob Evans net income fell 46 percent to $6.1 million, or 23 cents a diluted share, from $11.3 million, or 51 cents a diluted share, in the same quarter a year ago.
Net sales grew less than 1 percent to $332.6 million from $329.6 million over the same period. Notably, sales at restaurants open at least a year fell 1.9 percent from the year-ago quarter as the company adjusted its menu for price-sensitive customers and absorbed lost sales on days when 66 restaurants were closed for remodeling.
"The confidence we have in our ability to successfully execute our growth strategies and reap the benefits of our recent transformational growth investments in Bob Evans Restaurants and BEF Foods is reflected in our announcement of an incremental $50 million for share repurchases," CEO Steve Davis said in a written statement.
The quarter's increase in repurchase authority "brings our expected share repurchase activity to $225 million for fiscal 2014," Davis said. The company's fiscal year ends in April.
It also boosts its leverage ratio of adjusted debt to operating earnings to three times, which "is a prudent level of leverage that will allow us to invest in our businesses, return meaningful capital to shareholders, and maintain flexibility for acquisitions," Davis said.
Initially, shareholders didn't like the news about the decline in net income, sending Bob Evans shares down nearly 10 percent in early morning trading.
After digesting the company's second-quarter investments, which could help future profit, and its increase in share repurchase authority, designed to return value to shareholders, the market disapproval softened.
By the noon hour, Bob Evans shares were down a little less than 5 percent at $52.40.