February 7, 2014
Nathan''s Famous reports 4.2% rise in earnings
For the third quarter ended December 29, 2013, Nathan''s Famous reported earnings of US$1.107 million, or US$0.24 per share, which represents an increase of 4.2% compared to the year-ago quarter.
Revenues advanced 23.3% to US$18.53 million compared to US$15.025 million in 2012. Branded Product Programme sales for year gained 20.3% to US$40,256,000. The segment includes sales of Nathan''s hot dogs to the foodservice industry. Sales for the year at company owned restaurants declined to US$11.54 million against US$12.38 million during the same period of the previous year.
The company said the decline in sales was due to their Flagship Coney Island restaurant, which was severely damaged by Super Storm Sandy, reopened on May 20, 2013, losing eight weeks of the spring season during the current fiscal year, compared to the post-Sandy closure of eight weeks in November and December 2012. The temporary closing of their Yonkers restaurant for redevelopment from December 2012 until reopening in November 2013 has also caused the decline in sales. They estimate these two factors negatively impacted the sales comparison by approximately US$1,606,000.
The company also announced that a new license agreement with John Morrell & Co. will begin in March. The agreement makes John Morrell the exclusive licensee to manufacture and sell Nathan''s hot dog, sausage and corned beef products at retail. John Morrell is a subsidiary of Smithfield Foods, Inc.
As previously disclosed, the company believes the financial terms of the John Morrell agreement are more advantageous to them compared to the financial terms of the current SMG agreement. "These improved terms include royalties of 10.8% of net sales, compared to approximately 4.5% of net sales under the SMG agreement, and significant minimum annual royalty guarantees. Under the John Morrell Agreement, the minimum guarantee for the first year is US$10 million, and we believe that actual royalties should exceed the minimum. Royalties earned under the SMG agreement over the last 12 months were US$5,346,000," the company added.