Jack In The Box's Comps to Decline in Q2 Due to Coronavirus
Jack In The Box Inc. JACK recently provided an update on the impact of the coronavirus (COVID-19) pandemic on its business. It also provides an insight on the strategic initiatives, which the company is undertaking to tackle the crisis.
Notably, shares of the company have declined 46.4% in the past three months compared with the industry’s fall of 21.4%.
Sales Decline Due to Coronavirus
For the seven weeks ended Mar 8, Company store sales, Franchise sales and system same-store sales were up 5.1%, 5.3% and 5.2%, respectively. Afterwards, the metric declined 16.8% and 17%, respectively, for the five weeks ended Apr 12. System same-store sales also declined 17%.
For fiscal second quarter ended Apr 12, Company store sales and Franchise sales are anticipated to decline 4.1% and 4.2%, respectively. Also, the company’s system same-store sales are projected to decline 4.2% in quarter.
The company stated that with minimal temporary closures, more than 99% of its restaurants were in operation during the pandemic. Notably, it is operating in an off-premise capacity. However, due to the unprecedented nature of the crisis, the company has withdrawn its fiscal 2020 guidance.
Other Updates
To mitigate financial and operational impact of the outbreak, the company has undertaken certain actions to reduce its operating expenses as well. This includes reduced marketing fees, postponed collection of rental payments, delayed franchise development agreements and suspension in other capital investments.
Moreover, the company suspended its stock buyback program to preserve cash and maintain ample liquidity amid a possible recession due to the coronavirus outbreak.
Although this deadly severe acute respiratory syndrome has claimed too many lives so far, the company shows enough resilience to fight the current calamity. We believe that it will continue to monitor the COVID-19 crisis and adjust its business contingency plans to emerge out of this situation.
Zacks Rank & Key Picks
Jack in the Box currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Some better-ranked stocks in the Retail-Wholesale sector include Sprouts Farmers Market, Inc. SFM, Dine Brands Global, Inc. DIN and Potbelly Corporation PBPB. Sprouts Farmers sports a Zacks Rank #1, while Dine Brands and Potbelly carry a Zacks rank #2 (Buy).
Sprouts Farmers has three-five year earnings per share growth rate of 5.8%
Dine Brands 2020 earnings are expected to rise by 4%.
Potbelly has an impressive long-term earnings growth rate of 17.5%.
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