Del Frisco’s stock sinks after lower earnings forecast
07/22/2014 11:26 AM
07/22/2014 11:27 AM
Shares of Southlake-based Del Frisco’s Restaurant Group sank about 12 percent Tuesday after the steakhouse operator cut its earnings forecast and said several restaurant openings will be delayed.
For the second quarter, Del Frisco’s reported net income of $4.8 million, or 20 cents a share, up from $4.4 million, or 19 cents, a year ago. Consolidated revenues increased by 11.6 percent.
But CEO Mark Mednansky said the company is adopting a “more cautious view on consolidated revenues” for the back half of 2014. He said the opening of a Del Frisco’s Double Eagle steakhouse in Washington, D.C., has been pushed back from the third quarter to the fourth, and two of the three Del Frisco’s Grille openings planned for the fourth quarter will take place later than originally anticipated.
Sales projections for Double Eagle steakhouses in Chicago and Palm Beach were also lowered.
The company lowered its outlook for earnings per diluted share to 90-94 cents, from a previous range of 94-98 cents a share. Its shares (ticker: DFRG) closed down $3.02 at $22.21.
During a conference call with analysts, Mednansky said the postponed openings result from delayed construction by landlords, and he referred to the problems as “short-term.”
“We remain confident in the health of the upscale consumer segment and in their willingness to spend discretionary income,” he said.
In the second quarter, same-store sales at the Double Eagle steakhouses increased 5.2 percent but only 0.9 percent at Sullivan’s, the first positive showing at that chain since the third quarter of 2012.
The company’s fast-growing Grille restaurants, with locations in Fort Worth and Southlake, showed revenue growth of 53 percent, with the addition of six restaurants over 12 months.
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