Denny’s shares jumped in after-hours trading Thursday after the restaurant chain reported better-than-expected earnings despite losing its dine-in business to coronavirus shutdowns.
For the first quarter ended March 25, Denny’s earned net income of $9 million, or 16 cents a share, compared with net income of $15.5 million, or 25 cents a share, a year ago. Revenue tumbled 36% to $96.7 million as the company was limited to pick-up and delivery sales channels for much of the quarter.
Analysts had expected earnings of 11 cents per share on sales of $98.7 million.
“While the Denny’s brand had a positive start to the year delivering solid sales results through February, the dramatic and sudden impact of COVID-19 and related restrictive government mandates weighed on the final weeks of the fiscal first quarter,” CEO John Miller said in a news release.
Same-store sales, a key retail metric, fell 6.3% but investors appeared to welcome the results as Denny’s shares rose 12.3% to $9.85 in the extended session. The stock is still down 50% for the year to date.
Denny’s reported that the year-over-year slide in same-store sales has slowed over the past few weeks from 79% in the week ended April 1 to 68% in the week ended May 6.
“Average unit volumes of off-premise sales have more than doubled from February 2020 to April 2020, supported by temporarily waived delivery fees, new ‘Dine-Thru’ curbside service programs, and recently launched shareable family meal packs,” the company said
Pick-up accounted for 57% of Denny’s total sales in April while delivery accounted for 39%.
Amid the COVID-19 shutdowns, 82% of Denny’s restaurants are currently operating, most with take-out and delivery options, streamlined menus, and reduced operating hours, which have impacted same-store sales.
With restrictions on dine-in service being eased, 521 Denny’s restaurants have reopened dining rooms with capacity limitations in 21 states.
“As we look ahead, we are well-positioned to reopen dining rooms, focus on recovery, and create value for our stakeholders,” Miller said.
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