Jack in the Box (NASDAQ:JACK) Surprises With Q1 Sales
Fast-food chain Jack in the Box (NASDAQ:JACK) beat analysts' expectations in Q1 FY2024, with revenue down 7.5% year on year to $487.5 million. It made a non-GAAP profit of $1.95 per share, down from its profit of $2.01 per share in the same quarter last year.
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Jack in the Box (JACK) Q1 FY2024 Highlights:
- Revenue: $487.5 million vs analyst estimates of $481.6 million (1.2% beat)
- EPS (non-GAAP): $1.95 vs analyst expectations of $1.96 (small miss)
- Free Cash Flow was -$61.5 million, down from $14.65 million in the previous quarter
- Gross Margin (GAAP): 48.3%, up from 30.2% in the same quarter last year
- Same-Store Sales were up 0.8% year on year (miss, Del Taco concept beat on same-store sales)
- Store Locations: 2,192 at quarter end, decreasing by 586 over the last 12 months
- Market Capitalization: $1.44 billion
“The first quarter included notable progress on our long-term strategy and objectives we laid out at our recent Investor Day,” said Darin Harris, Jack in the Box Chief Executive Officer.
Delighting customers since its inception in 1951, Jack in the Box (NASDAQ:JACK) is a distinctive fast-food chain known for its bold flavors, innovative menu items, and quirky marketing.
Traditional Fast Food
Traditional fast-food restaurants are renowned for their speed and convenience, boasting menus filled with familiar and budget-friendly items. Their reputations for on-the-go consumption make them favored destinations for individuals and families needing a quick meal. This class of restaurants, however, is fighting the perception that their meals are unhealthy and made with inferior ingredients, a battle that's especially relevant today given the consumers increasing focus on health and wellness.
Sales Growth
Jack in the Box is larger than most restaurant chains and benefits from economies of scale, giving it an edge over its smaller competitors.
As you can see below, the company's annualized revenue growth rate of 14.3% over the last four years (we compare to 2019 to normalize for COVID-19 impacts) was impressive despite closing restaurants, suggesting that growth was driven by increased sales at existing, established dining locations.
This quarter, Jack in the Box's revenue fell 7.5% year on year to $487.5 million but beat Wall Street's estimates by 1.2%. Looking ahead, Wall Street expects revenue to decline 3.9% over the next 12 months.
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Same-Store Sales
Same-store sales growth is a key performance indicator used to measure organic growth and demand for restaurants.
Jack in the Box's demand within its existing restaurants has generally risen over the last two years but lagged behind the broader sector. On average, the company's same-store sales have grown by 3.7% year on year. Given its declining physical footprint over the same period, this performance stems from increased foot traffic at existing restaurants, which is sometimes a side effect of reducing the total number of locations.
In the latest quarter, Jack in the Box's year on year same-store sales were flat. By the company's standards, this growth was a meaningful deceleration from the 6.9% year-on-year increase it posted 12 months ago. We'll be watching Jack in the Box closely to see if it can reaccelerate growth.
Key Takeaways from Jack in the Box's Q1 Results
While same-store sales for the main Jack in the Box concept missed, revenue still managed to outperform. Although gross margin beat, operating profit was roughly in line, leading to a penny miss on the EPS line. Overall, we think this was a fine quarter. The stock is flat after reporting and currently trades at $73.95 per share.
Jack in the Box may have had a good quarter, but does that mean you should invest right now? When making that decision, it's important to consider its valuation, business qualities, as well as what has happened in the latest quarter. We cover that in our actionable full research report which you can read here, it's free.
