Mar. 16, 2011 (Canada NewsWire Group) --
MONCTON, N.B., March 15 /CNW/ - Imvescor Restaurant Group Inc. ("IRG" or the "Company") (TSX: IRG), reported financial results today for the 13 weeks ending January 30, 2011 (or "first quarter"). The 2010 results are the 14 weeks ended January 30, 2010 and are therefore not directly comparable.
First Quarter Highlights
- Total system sales decreased by 0.5% for the first quarter compared to the same 13 weeks in the last year.
- Same store sales declined by 3.4% in the first quarter.
- IRG net loss of $0.000 per share in the first quarter compared to the 2010 results of $0.018 per share for the 14 weeks ended January 31, 2010.
- IRG repaid $0.9 million in long-term debt during the first quarter.
- The Company renewed the $15 million loan with GE Canada Equipment Financing G.P. which was due in December 2011.
- Denis Richard was appointed as CEO effective February 7, 2011
After an in-depth review of its operations, the Company has made several important changes to have the best manager leading each brand. This change puts a dedicated, competent leader in place for each of our key business segments.
- Kevin Friesen, formerly Chief Operating Officer for Pizza Delight and Baton Rouge, becomes Chief Operating Officer of Scores.
- Terry Faulconbridge, formerly Chief Operating Officer for Mikes and Scores, becomes Chief Operating Officer for Mikes.
- Amber Coggan-Imbeault, formerly Vice-President of Operations for Pizza Delight, becomes Chief Operating Officer for Pizza Delight.
- Demetri Tsigos, formerly Vice-President of Operations for Baton Rouge, becomes Chief Operating Officer for Baton Rouge.
The Company has also reduced its staff levels and decided to close its Ontario office to improve its cost structure going forward.
Mr. Richard was retained a specific mandate to restructure the operations and optimize the Company's capital structure which includes identifying financing options for the convertible debentures to minimize dilution for all shareholders and to maximize long term shareholder value.
The Company has conducted an in-depth review of its franchise network and various obligations to identify locations where actions should be taken, such as the strategic exit of underperforming locations with unfavorable lease terms to the Company.
There will be significant short term cash requirements to implement the operational restructuring as well as to invest in technology systems. These strategic actions have been identified as a priority to improve future earnings as well as enhance the Company's ability to raise financing that is beneficial to shareholders with the objective of minimizing shareholder dilution. The cash necessary to execute these strategic actions requires the Company to suspend its payment of dividends. The Board of Directors approved the postponement of future dividends to permit the optimal pursuit of these objectives.
First Quarter 2011 Financial and Operating Results
For the 13 weeks ended January 30, 2011, the Company opened 1 Pizza Delight, 1 Mikes, 1 Scores, and closed 1 Pizza Delight and 1 Mikes while renovating 1 Pizza Delights and 1 Mikes.
The following table provides selected financial information for the 13
week period ending January 30, 2011, along with results for the prior
year, which were calculated for the 14 weeks ended January 31, 2010.
|(in thousands of dollars except per share items)||
(13 weeks ended
January 30, 2011)
(14 weeks ended
January 31, 2010)
|Royalties, retail, supply chain and other revenue||7,531||7,732|
|Sales less cost of goods sold||1,155||1,483|
|General and administrative expenses||5,778||6,104|
|Net earnings (loss)||(1)||167|
|Basic earnings (loss) per share||(0.000)||0.018|
IRG derives its revenues primarily from royalties based on system sales from each of its four brands: Pizza Delight™, Mikes™, Scores™ and Baton Rouge™.
Total system sales for the first quarter were $99.2 million, as compared to $106.8 million for the 14 weeks in 2010.
Royalties, retail, supply chain, and other revenue for the first quarter were $7.5 million as compared to $7.7 million for the 14 weeks ended January 31, 2010.
Same store sales ("SSS") were down 3.4% during the first quarter. SSS at Pizza Delight were +0.1%; Mikes SSS were -2.5%; Scores SSS were -6.5%; and Baton Rouge SSS were -3.5% for the first quarter. These decreases are due in part to the continuing slow economy, the promotion of menu items priced at a lower price to drive customer count in certain of its brands, and the negative impact of the weather. With a new CEO in place and dedicated COO's for each brand, there will be a stronger focus on improving this important metric.
Net loss for the Company for the first quarter was $1 thousand or $0.000 per share compared to net earnings of $167 thousand or $0.018 per share for the 14 weeks ended January 31, 2010. Included in the quarter was $611 thousand in lease exit costs representing the cost to exit specific locations.
Total long-term debt at January 30, 2011 decreased to $42.6 million as compared to $43.7 million at October 31, 2010, a result of principal payments. Debt repayment remains a priority of the Company.
A priority for 2011 is the execution of the operational restructuring plan outlined above together with identifying financing options for the Convertible Debentures to minimize dilution for all shareholders and to maximize long term shareholder value.
The Company believes that its restaurant brands provide quality food and good value to consumers in the family mid-scale category which helps maintain sales as the general economic conditions continue to be a challenge.
The Company continues its focus on growing existing restaurant sales and expanding the number of franchised restaurants in Ontario, Quebec, Atlantic Canada, and Alberta. This will be accomplished through a combination of building design, menu enhancement, brand awareness and regular renovations to modernize the existing restaurants.
Management expects same store sales growth from renovations to the Mikes and Pizza Delight restaurants in its current markets while the new concepts will provide a solid platform in the markets where the Company plans to expand. Management is working closely with the franchisees in the ongoing renovations of its existing restaurants to these new concepts.
The Company will continue to seek opportunities to open new restaurants. One Pizza Delight, one Scores restaurants and one Mikes restaurants were opened so far in 2011.
The Company has conducted a review of its franchise network and various lease obligations. The review has identified certain locations where the long-term outlook suggests that strategic actions must be taken, such as restaurant closures and the strategic exit of locations with unfavorable lease terms to the Company. During the 13 weeks ended January 30, 2011 the Company recorded an expense of $611 thousand as the cost to exit specific leases. This should result in the reduction of expenses in certain locations going forward, as well as reduced time spent by management on these matters. The exact terms and amounts required for these strategic actions will not be known until the Company concludes the requisite negotiations for each situation.
This review and plan of action is expected to be concluded by mid-fiscal 2011 and preliminary estimates indicate that the required strategic actions will result in an additional charge of $2.5 million to $3.5 million during the current fiscal year and with some actions and associated costs extending to 2012 and beyond. The Company will be working with its lenders to ensure that any violations to its debt covenant ratios are resolved prior to fiscal year end. The long term benefit of resolving these issues should result in future savings in operating expenses.
About Imvescor Restaurant Group
Headquartered in Moncton, New Brunswick, Imvescor Restaurant Group owns franchised and corporate stores throughout Canada, under four brands: Pizza Delight® operates primarily in Atlantic Canada, where it dominates the family/mid-scale segment. Mikes® and Scores® restaurants operate primarily in Quebec in the family and casual dining segments and the take-out and delivery segments. Baton Rouge® operates in Quebec, Ontario, and Alberta in the casual dining segment.
Certain information regarding Imvescor Restaurant Group contained herein may constitute forward-looking statements within the meaning of applicable securities laws. Forward-looking statements may include estimates, plans, expectations, opinions, forecasts, projections, guidance or other statements that are not statements of fact. Although the Company believes that the expectations reflected in such forward-looking statements are reasonable, it can give no assurance that such expectations will prove to have been correct. The Company cautions that actual performance will be affected by a number of factors, many of which are beyond the Company's control, and that future events and results may vary substantially from what the Company currently foresees. The Company assumes no obligation to update such forward-looking statements, except as required by applicable securities laws. The Company's forward-looking statements are expressly qualified in their entirety by this cautionary statement.
President & Chief Executive Officer
Imvescor Restaurant Group Inc.
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