Jack in the Box (NASDAQ:JACK) Misses Q1 Sales Targets
Fast-food chain Jack in the Box (NASDAQ:JACK) missed analysts' expectations in Q1 CY2024, with revenue down 7.7% year on year to $365.3 million. It made a non-GAAP profit of $1.46 per share, improving from its profit of $1.27 per share in the same quarter last year.
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Jack in the Box (JACK) Q1 CY2024 Highlights:
- Revenue: $365.3 million vs analyst estimates of $369.7 million (1.2% miss)
- Adjusted EBITDA: $75.7 million vs analyst estimates of $74.4 million (1.7% beat)
- EPS (non-GAAP): $1.46 vs analyst estimates of $1.43 (2.3% beat)
- Full year guidance lowered across the board for adjusted same-store sales, EBITDA, EPS
- Gross Margin (GAAP): 30.8%, up from 29.4% in the same quarter last year
- Free Cash Flow was -$67.09 million compared to -$61.5 million in the previous quarter
- Same-Store Sales were down 2.5% year on year (miss)
- Store Locations: 2,195 at quarter end, decreasing by 587 over the last 12 months
- Market Capitalization: $1.04 billion
"I am proud of the execution by our Jack and Del Taco teams, delivering better-than-expected earnings and margin performance while navigating through increasing macro headwinds, pressure on low-income consumers and the implementation of California's minimum wage legislation," 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 13.2% over the last five years was impressive despite closing restaurants, suggesting that growth was driven by increased sales at existing, established dining locations.
This quarter, Jack in the Box missed Wall Street's estimates and reported a rather uninspiring 7.7% year-on-year revenue decline, generating $365.3 million in revenue. Looking ahead, Wall Street expects revenue to decline 1.8% over the next 12 months.
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Same-Store Sales
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 3.5% 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 same-store sales fell 2.5% year on year. This decline was a reversal from the 8.3% year-on-year increase it posted 12 months ago. We'll be keeping a close eye on the company to see if this turns into a longer-term trend.
Key Takeaways from Jack in the Box's Q1 Results
We liked how Jack in the Box beat analysts' gross margin, adjusted EBITDA, and EPS expectations this quarter. On the other hand, its same-store sales unfortunately missed analysts' expectations, leading to a revenue miss as well. While full year guidance was broadly lowered, the company did mention that "sales have improved since its [Smashed Jack product] introduction in mid-March". Overall, this quarter's results were mixed. The stock is flat after reporting and currently trades at $53.25 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.
