Often, in the world of investing, management makes promises to its investors that it has no intention of keeping. Well, you can't say that about the management at Bob Evans Farms (NASDAQ:BOBE), since it followed through on the promise it made last quarter. Unfortunately for investors, that promise was that it would generate significantly reduced first-quarter earnings.
For the quarter, Bob Evans reported a 50% decrease in earnings, with net income of $7.2 million, or $0.20 per diluted share. Total sales jumped 23% to $395.6 million, but that improvement is primarily attributable to its acquisition of Mimi's Cafe back in July 2004.
Once again, Bob pointed to decreasing same-store sales as the culprit. Comps fell 1.9% at its Bob Evans Restaurants after dropping 3.1% in the year-ago period. However, Mimi continues to hang tough, increasing comps by 3%.
Although Bob has a lot of work ahead, it wasn't all bad news on the farm. Hog prices dropped to an average cost of $48 per hundredweight, compared with $52 last year. The lowered costs helped boost the performance of its food products segment, which increased sales by 7% and earned $1.7 million after losing $833,000 last year. Continued success from its sales of refrigerated products, particularly mashed potatoes and mac and cheese, also helped prop up the company's results.
Although it no longer offers earnings guidance, management at Bob Evans is "cautiously optimistic" about the company's future. The company is no doubt in a period of transition as it searches for a new CEO, continues to integrate Mimi into the fold, and works to get its business back on track. There are still a plethora of challenges ahead, but with some luck, Bob may be nearing the end of its dry spell. I wouldn't bet the farm on this one just yet, but I will be keeping an eye on how it lassos its challenges.
Bob Evans still too fatty for you? Try a leaner cut of meat at some of its competitors:
- Cracker Barrel (NASDAQ:CBRL)
- Denny's (NASDAQ:DENN)
- IHOP (NYSE:IHP)
Fool contributor Mike Cianciolo welcomes feedback and doesn't own shares of any company mentioned in this article.
