Must be something in the meat. Yesterday, shares of Coney Island hot dog company Nathan's Famous (NASDAQ:NATH) jumped more than 7% following the company's release of fiscal third-quarter income statement numbers. The figures highlight the success of many of the efforts the company was undertaking when I last took a look at it way back in November 2003.
Back then I mentioned its moves to cut costs, increase franchising (a more profitable business that brings lower revenues than operating stores), and boost its branded products and licensing businesses.
Most of those initiatives played roles in Nathan's latest earnings release. The company said it franchised five company-owned restaurants during the quarter, lowering restaurant sales by $1.2 million but inflating operating profit by $162,000. Branded products sales rose nearly 37% during the reported nine-month period, coming in at $7.9 million. And license royalties rose almost 8%.
And while the company's press release reported only limited income statement figures that didn't include a detailed cost breakout, its accompanying SEC filing pointed to improved operating margins. All told, sales and net profits are up, and management is rightfully pleased. Investors have been, too: Their shares, up nearly 200% since my 2003 article, yesterday moved back toward 52-week highs.
Small companies need to sustain profit growth to sustain investor interest, and that's just what this one is doing by building on its brand and focusing on the bottom line first and foremost.
Fool contributor Dave Marino-Nachison doesn't own Nathan's, but he loves eating the stuff.
