MTY Group on Friday revealed results below analysts’ expectations for its first quarter, which saw extreme weather conditions disrupt the activities of its franchised restaurants.
The month of January was marked by significant storms in the eastern and central United States. Tornadoes also hit the state of Florida. “In several regions, people were more or less confined to the house due to the weather,” explained its president and CEO, Éric Lefebvre, during a conference call to discuss the Montreal company’s quarterly results.
The owner of the Valentine, Thaï Express and Sushi Shop brands recorded a drop in comparable sales of 3% in the first quarter ended February 29. Comparable sales are an important indicator for businesses, because they make it possible to measure growth, excluding acquisitions as well as openings and closures of establishments.
Mr. Lefebvre acknowledged that the economic context was difficult for consumers, but he indicated that the weather was overshadowing signs of resilience on the part of consumers. “We saw sales drop drastically in January with the weather, but sales rebounded in the second half of February and into March. […] Spending resumed after weather conditions normalized. »
In February, he mentioned that household finances were tighter and that this had slowed down their spending at restaurants last fall.
The company again narrowly missed its goal of opening more restaurants than it closes. The MTY network opened 75 restaurants during the first quarter, but closed 79. The difference of four net closures, however, is much smaller than that of 36 net closures during the same period last year.
“The first quarter is always the most difficult for openings and closings, while the months of January and February are the most difficult for our industry,” explains the manager. Despite this seasonal context, we have come close to balance. »
The MTY Group franchises and operates 7,112 restaurants in more than 90 different brands in Canada, the United States and internationally.
The MTY boss indicated that the company had little appetite for acquisitions at the moment. “I don’t expect anything significant this year. There could always be an opportunity that we can’t pass up, but right now we’re not considering anything significant, nothing that would increase our debt significantly. »
With interest rates high, he also mentioned that he believes paying down debt is a good use of capital. “It reduces the debt service burden and gives us a reserve for future opportunities. »
For the first quarter, MTY revealed a net profit of $17.3 million, compared to $18.4 million for the same period last year. Earnings per share came in at 71 cents. Revenues, for their part, declined by 3% to $278.6 million.
Before the results were released, analysts expected earnings per share of 85 cents and revenue of $276 million, according to financial data firm Refinitiv.
MTY shares were down $3.85, or 7.68%, at $46.29 on the Toronto Stock Exchange in the morning.