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Shells Seafood Restaurants, Inc. (BULLETIN BOARD: SHLL) today reported financial results for its fourth quarter and the fiscal year ended December 30, 2007.
Key metrics --
Fourth quarter of 2007 compared to the fourth quarter of 2006:
• Revenues decreased 21.7% to $7.6 million.
• Comparable restaurant sales decreased 18.3%.
• Net loss of $2.3 million, was the same as in the fourth quarter of 2006. Excluding non-recurring items, net loss of $1.5 million, compared to a net loss of $1.0 million.
• Net loss per share of $0.10, compared to net loss per share of $0.13. Excluding non-recurring items, net loss per share of $0.06, same as in the fourth quarter of 2006.
Fifty-two weeks of 2007 compared to the fifty-two weeks of 2006:
• Revenues decreased 13.3% to $41.5 million.
• Comparable restaurant sales decreased 11.4%.
• Net loss of $4.4 million, compared to a net loss of $3.0 million. Excluding non-recurring items, net loss of $3.2 million, compared to a net loss of $2.0 million.
• Net loss per share of $0.21, compared to a net loss per share of $0.18. Excluding non-recurring items, net loss per share of $0.15, compared to net loss per share of $0.12.
Warren Nelson, interim president, commented, "2007 has been a challenging year for casual dining restaurants in general, and the Florida economic environment has been difficult for Shells. While we are disappointed with our results in 2007, we have worked diligently to reduce our expenses, while focusing on providing greater dining value for our guests." Nelson further added, "Building guest traffic and sales, while holding expenses in-line, are both critical to our ability to persevere through this economic downturn and reposition our brand for future long-term success. Our efforts are directed toward providing our guests with great quality seafood at price points which project a strong value statement."
Operating Results
Revenues for the fourth quarter of 2007 decreased 21.7% to $7,564,000 from $9,659,000 in the fourth quarter of 2006, predominantly due to a 18.3% decrease in same store sales, and to a lesser extent, the second and fourth quarter 2007 dispositions of two under performing restaurants. As of the end of the fourth quarter of 2007, the Company had 23 restaurants in operation, compared to 25 restaurants at the end of the fourth quarter of 2006.
Restaurant operating costs, consisting of food and beverage costs, labor, other operating costs, depreciation expense and provision for impairment expense, were $8,850,000, or 117.6% of sales, in the fourth quarter of 2007, compared to $11,001,000, or 114.2% of sales, in the fourth quarter of 2006. Excluding non-recurring items, restaurant operating costs were $8,192,000, or 108.8% of sales, in the fourth quarter of 2007, compared to $9,714,000, or 100.9% of sales. The 7.9% increase in restaurant operating costs, as a percentage of sales, primarily resulted from a loss of operating leverage as reflected by the reduction in sales volume, and to a lesser extent, increases in commodity costs and minimum wage.
General & administrative expenses were $792,000, or 10.5% of revenues, in the fourth quarter of 2007 compared to $784,000, or 8.1% of revenues, in the fourth quarter of 2006. The unfavorable variance as a percentage of revenues reflects the reduction in sales volume and incremental stock option expense of $71,000, or 1.0% of revenues.
The loss from operations in the fourth quarter of 2007 of $2,078,000 was $48,000 less than the loss from operations in the comparable period of 2006. Excluding non-recurring items in both periods, the loss from operations in the fourth quarter of 2007 of $1,420,000 was $581,000 greater than the comparable period of 2006. The loss from operations in fiscal 2007 of $3,940,000 was $1,474,000 greater than the loss from operations in the comparable period of 2006. Excluding non-recurring items in both periods, the loss from operations in fiscal 2007 of $2,672,000 was $1,341,000 greater than the comparable period of 2006.
The net loss for the fourth quarter of 2007 was $2,274,000, or $0.10 per share based upon 23.5 million common shares outstanding, compared to a net loss in the fourth quarter of 2006 of $2,291,000, or $0.13 per share based upon 17.6 million common shares outstanding. As adjusted for non-recurring items as summarized in the ensuing financial tables, the net loss for the fourth quarter of 2007 was $1,506,000, or $0.06 per share, compared to a net loss for the fourth quarter of 2006 of $1,004,000, or $0.06 per share.
The net loss for fiscal 2007 was $4,400,000, or $0.21 per share based upon 20.9 million common shares outstanding, compared to a net loss for fiscal 2006 of $3,002,000, or $0.18 per share based upon 16.7 million common shares outstanding. As adjusted for non-recurring items as summarized in the ensuing financial tables, the net loss for fiscal 2007 was $3,154,000, or $0.15 per share, compared to a net loss for fiscal 2006 of $2,017,000, or $0.12 per share.
About the Company
The Company manages and operates 23 full-service, neighborhood seafood restaurants in Florida under the name "Shells". Shells restaurants feature a wide selection of seafood items, including shrimp, oysters, clams, crawfish, mussels, scallops, lobster, crab and daily fresh fish specials, cooked to order in a variety of ways: steamed, sauteed, grilled, blackened and fried. Shells restaurants also offer a wide selection of signature pasta dishes, appetizers, salads, desserts and full bar service.
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