The Big Financal News April 2007
Landry's takes $8.6M charge for stock-option mistakes
HOUSTON (Apr. 2) Landry's Restaurants Inc. reported last week that it would take a non-cash charge of about $8.6 million to correct past stock option accounting errors.
The company also said it could not file its fiscal year 2006 financial results until it completed a second review of past stock option practices, although it did forecast a net loss for the year mainly because of the sale of its Joe's Crab Shack concept in the fourth quarter. The net loss for those discontinued operations totaled $41.1 million for the nine months ended Sept. 30, according to past company filings.
Landry's currently operates about 200 restaurants under the Landry's Seafood House, Chart House, Rainforest Cafe, Saltgrass Steak House and other brands, as well as hotels, marinas, retail sites and the Golden Nugget Hotels and Casinos. It also is bidding for the Smith & Wollensky upscale steakhouse chain.
As previously reported, fiscal 2006 revenues from continuing operations increased 26.4 percent to $1.1 billion, aided mostly by the late 2005 acquisition of the Golden Nugget Hotels and Casinos.
The company's board of directors said a second review of stock option practices, currently underway and led by independent directors serving on the audit committee, is expected to be completed by the second quarter of the current fiscal year.
Landry's said its internal voluntary review of option granting practices did not find “any intentional backdating of options or fraudulent retroactive documentation regarding options.” Last month, the company forecast that total charges stemming from the review would total as much as $8 million.
Buffalo Wild Wings shares rise
Shares of chicken wing chain Buffalo Wild Wings Inc. hit a 52-week high Monday after a Sanders Morris Harris analyst raised his price target on the shares and predicted the company will record a strong first quarter.
Analyst Will Hamilton raised his price target to $72 from $64, noting the company’s rising share price and history of positive earnings reports.
‘Over the last seven months, Buffalo Wild Wings’ earnings results, and subsequently its stock price, have been on a tear, each more than doubling during that period,’ he said in a note to investors.
Hamilton said investors may be in for another report in which the company beats Wall Street’s expectations.
‘The catalysts for a third consecutive surprise would likely be better-than-expected restaurant margins and top-line growth,’ he wrote.
Hamilton added that the company may have years of growth ahead. ‘Despite its recent expansion, Buffalo Wild Wings still has the market opportunity to triple its current restaurant base of 435 units over the next eight to 10 years, in our opinion,’ he said. ‘Large markets like California, the Northeast, and the Northwest remain under-penetrated.’
Buffalo Wild Wings shares rose $1.85, or 2.9 percent, to close at $65.55 the Nasdaq Stock Market. The shares hit a new high of $66.12 earlier in the day. The stock had traded between $30.83 and $64.18 during the past 52 weeks.
Smith & Wollensky 4Q loss widens
Upscale steakhouse operator Smith & Wollensky Restaurant Group Inc. said Monday its fourth-quarter loss widened on impairment charges.
The company reported a loss of $3.5 million, or 40 cents per share, compared with a loss of $397,000, or 4 cents per share, a year ago. Excluding impairment charges, the company’s earnings increased to $2.3 million, or 27 cents per share.
Fourth-quarter revenue grew 8 percent to $36.2 million, from $33.7 million in the prior year.
Same-store sales, or sales at restaurants open at least 15 months, grew 3.9 percent in the fourth quarter.
The company’s full-year loss widened to $4.2 million, or 49 cents per share, from $3.1 million, or 33 cents per share, a year ago. Sales fell half a percent to $124.8 million, from $125.4 million in the prior year. Same-store sales grew 1.8 percent from 2005.
Smith & Wollensky shares dropped 12 cents to close at $9.77 on the Nasdaq Stock Market.