Champps Entertainment, Inc. (Nasdaq:CMPP) today announced results
for its fiscal 2007 first quarter ended October 1, 2006. Total
revenues for the first quarter decreased 4.3% to $49.3 million,
compared with revenues of $51.5 million for the first quarter last
fiscal year. Comparable same store sales decreased 3.9 percent for
first quarter 2007. Comparable alcohol sales decreased 2.0 percent,
while comparable food sales decreased 4.6 percent for the first
quarter 2007. Net loss for the first quarter 2007 was $42,000, or
$0.00 loss per diluted share, compared to net loss of $0.2 million,
or $0.02 loss per diluted share, in the same quarter last year. A
discontinued operations loss of $0.3 million (net of tax), or $0.03
loss per diluted share, was recorded in last year�s first quarter.
�We found the macro-economic factors we experienced in the first
half of this calendar year carried over to this last quarter and
negatively influenced our sales. We also believe our sales were
negatively affected by increased competitor media advertising and
discounting,� noted Mike O�Donnell, Champps� Chairman, President,
and Chief Executive Officer. �These outside influences aside, we
are disappointed in our results this quarter as it is our job to
adjust and focus on increasing sales and controlling costs.�
O�Donnell added, �We continue to believe the best way for us to
meet our goals of increased sales and profits is by concentrating
on what we can positively influence. We continue to focus on our
initiatives and improving the basics of our business so we can
deliver superior experiences to our customers that will ultimately
translate into higher restaurant volumes and profits. Specifically,
we are continuing the roll-out of our new cash flow partnership
bonus plan, focusing on menu development and product execution, and
enhanced training programs including the roll-out of our
'visioneering' culture based training program which communicates
our foundational ideas, principles and stakeholder commitments.
Additionally, we are working to return to growth in the future,
with our first new restaurant scheduled to open in September 2007
and we expect to hire a new franchise development executive in the
near future to start growth in that area as well.� Product costs
increased to 29.1 percent of sales in the most recent quarter from
28.1 percent of sales compared to the first quarter of the last
fiscal year reflecting higher produce and seafood costs. Labor
costs increased to 33.0 percent of sales from 32.7 percent of sales
for the same period last fiscal year primarily due to the
de-leveraging effect associated with lower sales. Other operating
costs increased to 16.7 percent of sales in this year�s first
quarter from 15.0 percent of sales in the same quarter last year
primarily as a result of higher marketing costs and the lower
average sales. During the first quarter of fiscal 2007,
approximately $0.3 million was spent on a radio marketing test in
two markets. Occupancy expense decreased to 10.0 percent of sales
versus 10.5 percent of sales in the first quarter last fiscal year
because of reduced general and property insurance costs.
Depreciation and amortization expense was 5.3% of revenues in both
the first quarters of fiscal 2007 and 2006. General and
administrative expenses for the first quarter decreased to $3.5
million, or 7.1 percent of revenues, compared to $3.7 million, or
7.2 percent of revenues, in the comparable period last fiscal year.
This decrease resulted from reduced support staff levels and
compensation expense for stock-based compensation partially offset
by higher legal costs related to litigation and higher tax costs.
Dave Womack, Chief Financial Officer, commented, �We do not expect
to open any new restaurants in fiscal 2007; however, we do expect
to return to modest growth in fiscal 2008. Our capital spending for
fiscal 2007 is expected to be between $4 to $6 million, which is
dependent on the level of new location capital spending related to
fiscal 2008 openings. During the first quarter of fiscal 2007, we
repurchased 100,000 common shares at a cost of $603,000.� The
Company's management will discuss the results of the first quarter
2007 on a conference call and simultaneous webcast on November 8,
2006, at 10:00 a.m. ET. To hear the call in a listen-only mode,
participants must dial 877-497-1954 or 706-758-9642 (International)
at least ten minutes prior to the start of the call and refer to
conference identification number 9710594. To hear a live Web
simulcast of the call, visit the company's Web site at
www.champps.com, click on the Investor Relations icon and refer to
conference identification number 9710594. If unable to participate
at the time of the call, the archived webcast can be accessed until
December 8, 2006, by visiting www.champps.com, clicking on the
Investor Relations icon and referring to conference identification
number 9710594. About Champps Entertainment, Inc. Champps
Entertainment, Inc. owns and operates 50 and franchises/licenses 13
Champps restaurants in 23 states. Champps, which competes in the
upscale casual dining segment, offers an extensive menu consisting
of freshly prepared food, coupled with exceptional service. Champps
creates an exciting environment through the use of videos, music,
sports and promotions. Safe Harbor Statement Certain statements
made in this press release are forward-looking statements based on
management's current experience and expectations. These
forward-looking statements are made pursuant to the safe harbor
provisions of the Private Securities Litigation Reform Act of 1995.
Such statements involve certain risks and uncertainties that could
cause actual results to differ materially from those in the
forward-looking statements. Such forward-looking statements include
statements regarding our strategic initiatives; stock repurchase
program; lease renegotiations; impairment charges and closing of
restaurants; new menu and operating initiatives critical to
improvement in same store sales; the absence of new store openings
in the remainder of fiscal 2007; and future uses of cash for stock
repurchases or exit costs, among others. Among the factors that
could cause future results to differ materially from those provided
in this press release are: the ability of the Company to
successfully implement our strategic initiatives to improve same
store sales; the ability to make and fund stock repurchases; the
ability to successfully close or renegotiate lease terms for
certain restaurants; the impact of intense competition in the
casual dining restaurant industry; the Company's ability to control
restaurant operating costs, which are impacted by commodity prices,
minimum wage and other employment laws; fuel and energy costs;
consumer perceptions of food safety; changes in consumer tastes and
trends; and general business and economic conditions. Information
on significant potential risks and uncertainties that may also
cause such differences include, but are not limited to, those
mentioned by the Company from time to time in its filings with the
SEC. The words "may," "believe," "estimate," "expect," "plan,"
"intend," "project," "anticipate," "should" and similar expressions
and variations thereof identify certain of such forward-looking
statements, which speak only as of the dates on which they were
made. The Company undertakes no obligation to publicly update or
revise any forward-looking statements, whether as a result of new
information, future events, or otherwise. Readers are cautioned
that any such forward-looking statements are not guarantees of
future performance and involve risks and uncertainties, and,
therefore, readers should not place undue reliance on these
forward-looking statements. CHAMPPS ENTERTAINMENT, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS For the Three Months Ended
October 1, 2006 (Dollars in thousands, except per share data)
(Unaudited) � Three Months Ended October 1, October 2, 2006� 2005�
Revenue Sales $ 49,135� $ 51,339� Franchising and royalty, net 180�
137� Total revenue 49,315� 51,476� � Costs and expenses Cost of
sales and operating expenses Product costs 14,287� 14,451� Labor
costs 16,238� 16,763� Other operating expense 8,187� 7,667�
Occupancy 4,917� 5,397� Pre-opening expense -� 9� General and
administrative expense 3,515� 3,691� Depreciation and amortization
2,604� 2,723� Severance (136) 100� Other (income) expense 19� 59�
Income (loss) from operations (316) 616� Interest expense and
income, net 267� 333� Expenses related to predecessor companies 12�
(3) Income (loss) from continuing operations, before tax (595) 286�
Income tax expense (benefit) (558) 175� Income (loss) from
continuing operations (37) 111� Loss on discontinued operations,
net of tax 5� 317� Net loss $ (42) $ (206) � Basic income (loss)
per share: Income (loss) from continuing operations $ -� $ 0.01�
Loss from discontinued operations, net of tax -� (0.03) Net loss $
-� $ (0.02) � Diluted income (loss) per share: Income (loss) from
continuing operations $ -� $ 0.01� Loss from discontinued
operations, net of tax -� (0.03) Net loss $ -� $ (0.02) � Basic
weighted average shares outstanding 13,149� 13,050� � Diluted
weighted average shares outstanding 13,149� 13,120� CHAMPPS
ENTERTAINMENT, INC. Supplemental Information (Stated as a
percentage of restaurant sales) (Unaudited) � Three Months Ended
October 1, October 2, 2006� 2005� Store weeks 650� 650� Average
weekly sales 75,592� 78,983� � Product costs 29.1% 28.1% Labor
costs 33.0% 32.7% Other operating expenses 16.7% 15.0% Occupancy
10.0% 10.5% Pre-opening expenses 0.0% 0.0% � Total cost of sales
and operating expenses 88.8% 86.3% � Depreciation and amortization
5.3% 5.3% � Total cost of sales, operating expenses and
depreciation and amortization 94.1% 91.6% � General and
administrative expense 7.1% 7.2% (Stated as a percentage of
revenue) Champps Entertainment, Inc. Selected Balance Sheet
Information (In thousands) (Unaudited) � October 1, July 2, 2006�
2006� Cash and cash equivalents $ 7,742� $ 9,449� Current assets
23,531� 24,869� Total assets 134,151� 136,702� Current liabilities
11,300� 13,377� Debt 14,757� 14,707� Total shareholders' equity
76,291� 76,728� Champps Entertainment, Inc. Selected Cash Flow
Information (In thousands) (Unaudited) � Three Months Ended October
1, October 2, 2006� 2005� Net cash provided by (used in) operating
activities $ (277) $ 485� Net cash used in investing activities
(857) (1,280) Net cash provided by (used in) financing activities
(573) 369� Net change in cash and cash equivalents $ (1,707) $
(426) Champps Entertainment, Inc. (Nasdaq:CMPP) today announced
results for its fiscal 2007 first quarter ended October 1, 2006.
Total revenues for the first quarter decreased 4.3% to $49.3
million, compared with revenues of $51.5 million for the first
quarter last fiscal year. Comparable same store sales decreased 3.9
percent for first quarter 2007. Comparable alcohol sales decreased
2.0 percent, while comparable food sales decreased 4.6 percent for
the first quarter 2007. Net loss for the first quarter 2007 was
$42,000, or $0.00 loss per diluted share, compared to net loss of
$0.2 million, or $0.02 loss per diluted share, in the same quarter
last year. A discontinued operations loss of $0.3 million (net of
tax), or $0.03 loss per diluted share, was recorded in last year's
first quarter. "We found the macro-economic factors we experienced
in the first half of this calendar year carried over to this last
quarter and negatively influenced our sales. We also believe our
sales were negatively affected by increased competitor media
advertising and discounting," noted Mike O'Donnell, Champps'
Chairman, President, and Chief Executive Officer. "These outside
influences aside, we are disappointed in our results this quarter
as it is our job to adjust and focus on increasing sales and
controlling costs." O'Donnell added, "We continue to believe the
best way for us to meet our goals of increased sales and profits is
by concentrating on what we can positively influence. We continue
to focus on our initiatives and improving the basics of our
business so we can deliver superior experiences to our customers
that will ultimately translate into higher restaurant volumes and
profits. Specifically, we are continuing the roll-out of our new
cash flow partnership bonus plan, focusing on menu development and
product execution, and enhanced training programs including the
roll-out of our 'visioneering' culture based training program which
communicates our foundational ideas, principles and stakeholder
commitments. Additionally, we are working to return to growth in
the future, with our first new restaurant scheduled to open in
September 2007 and we expect to hire a new franchise development
executive in the near future to start growth in that area as well."
Product costs increased to 29.1 percent of sales in the most recent
quarter from 28.1 percent of sales compared to the first quarter of
the last fiscal year reflecting higher produce and seafood costs.
Labor costs increased to 33.0 percent of sales from 32.7 percent of
sales for the same period last fiscal year primarily due to the
de-leveraging effect associated with lower sales. Other operating
costs increased to 16.7 percent of sales in this year's first
quarter from 15.0 percent of sales in the same quarter last year
primarily as a result of higher marketing costs and the lower
average sales. During the first quarter of fiscal 2007,
approximately $0.3 million was spent on a radio marketing test in
two markets. Occupancy expense decreased to 10.0 percent of sales
versus 10.5 percent of sales in the first quarter last fiscal year
because of reduced general and property insurance costs.
Depreciation and amortization expense was 5.3% of revenues in both
the first quarters of fiscal 2007 and 2006. General and
administrative expenses for the first quarter decreased to $3.5
million, or 7.1 percent of revenues, compared to $3.7 million, or
7.2 percent of revenues, in the comparable period last fiscal year.
This decrease resulted from reduced support staff levels and
compensation expense for stock-based compensation partially offset
by higher legal costs related to litigation and higher tax costs.
Dave Womack, Chief Financial Officer, commented, "We do not expect
to open any new restaurants in fiscal 2007; however, we do expect
to return to modest growth in fiscal 2008. Our capital spending for
fiscal 2007 is expected to be between $4 to $6 million, which is
dependent on the level of new location capital spending related to
fiscal 2008 openings. During the first quarter of fiscal 2007, we
repurchased 100,000 common shares at a cost of $603,000." The
Company's management will discuss the results of the first quarter
2007 on a conference call and simultaneous webcast on November 8,
2006, at 10:00 a.m. ET. To hear the call in a listen-only mode,
participants must dial 877-497-1954 or 706-758-9642 (International)
at least ten minutes prior to the start of the call and refer to
conference identification number 9710594. To hear a live Web
simulcast of the call, visit the company's Web site at
www.champps.com, click on the Investor Relations icon and refer to
conference identification number 9710594. If unable to participate
at the time of the call, the archived webcast can be accessed until
December 8, 2006, by visiting www.champps.com, clicking on the
Investor Relations icon and referring to conference identification
number 9710594. About Champps Entertainment, Inc. Champps
Entertainment, Inc. owns and operates 50 and franchises/licenses 13
Champps restaurants in 23 states. Champps, which competes in the
upscale casual dining segment, offers an extensive menu consisting
of freshly prepared food, coupled with exceptional service. Champps
creates an exciting environment through the use of videos, music,
sports and promotions. Safe Harbor Statement Certain statements
made in this press release are forward-looking statements based on
management's current experience and expectations. These
forward-looking statements are made pursuant to the safe harbor
provisions of the Private Securities Litigation Reform Act of 1995.
Such statements involve certain risks and uncertainties that could
cause actual results to differ materially from those in the
forward-looking statements. Such forward-looking statements include
statements regarding our strategic initiatives; stock repurchase
program; lease renegotiations; impairment charges and closing of
restaurants; new menu and operating initiatives critical to
improvement in same store sales; the absence of new store openings
in the remainder of fiscal 2007; and future uses of cash for stock
repurchases or exit costs, among others. Among the factors that
could cause future results to differ materially from those provided
in this press release are: the ability of the Company to
successfully implement our strategic initiatives to improve same
store sales; the ability to make and fund stock repurchases; the
ability to successfully close or renegotiate lease terms for
certain restaurants; the impact of intense competition in the
casual dining restaurant industry; the Company's ability to control
restaurant operating costs, which are impacted by commodity prices,
minimum wage and other employment laws; fuel and energy costs;
consumer perceptions of food safety; changes in consumer tastes and
trends; and general business and economic conditions. Information
on significant potential risks and uncertainties that may also
cause such differences include, but are not limited to, those
mentioned by the Company from time to time in its filings with the
SEC. The words "may," "believe," "estimate," "expect," "plan,"
"intend," "project," "anticipate," "should" and similar expressions
and variations thereof identify certain of such forward-looking
statements, which speak only as of the dates on which they were
made. The Company undertakes no obligation to publicly update or
revise any forward-looking statements, whether as a result of new
information, future events, or otherwise. Readers are cautioned
that any such forward-looking statements are not guarantees of
future performance and involve risks and uncertainties, and,
therefore, readers should not place undue reliance on these
forward-looking statements. -0- *T CHAMPPS ENTERTAINMENT, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS For the Three Months Ended
October 1, 2006 (Dollars in thousands, except per share data)
(Unaudited) Three Months Ended --------------------- October 1,
October 2, 2006 2005 ---------- ---------- Revenue Sales $49,135
$51,339 Franchising and royalty, net 180 137 ---------- ----------
Total revenue 49,315 51,476 ---------- ---------- Costs and
expenses Cost of sales and operating expenses Product costs 14,287
14,451 Labor costs 16,238 16,763 Other operating expense 8,187
7,667 Occupancy 4,917 5,397 Pre-opening expense - 9 General and
administrative expense 3,515 3,691 Depreciation and amortization
2,604 2,723 Severance (136) 100 Other (income) expense 19 59
---------- ---------- Income (loss) from operations (316) 616
Interest expense and income, net 267 333 Expenses related to
predecessor companies 12 (3) ---------- ---------- Income (loss)
from continuing operations, before tax (595) 286 Income tax expense
(benefit) (558) 175 ---------- ---------- Income (loss) from
continuing operations (37) 111 Loss on discontinued operations, net
of tax 5 317 ---------- ---------- Net loss $(42) $(206) ==========
========== Basic income (loss) per share: Income (loss) from
continuing operations $- $0.01 Loss from discontinued operations,
net of tax - (0.03) ---------- ---------- Net loss $- $(0.02)
========== ========== Diluted income (loss) per share: Income
(loss) from continuing operations $- $0.01 Loss from discontinued
operations, net of tax - (0.03) ---------- ---------- Net loss $-
$(0.02) ========== ========== Basic weighted average shares
outstanding 13,149 13,050 Diluted weighted average shares
outstanding 13,149 13,120 *T -0- *T CHAMPPS ENTERTAINMENT, INC.
Supplemental Information (Stated as a percentage of restaurant
sales) (Unaudited) Three Months Ended --------------------- October
1, October 2, 2006 2005 ---------- ---------- Store weeks 650 650
Average weekly sales 75,592 78,983 Product costs 29.1% 28.1% Labor
costs 33.0% 32.7% Other operating expenses 16.7% 15.0% Occupancy
10.0% 10.5% Pre-opening expenses 0.0% 0.0% ---------- ----------
Total cost of sales and operating expenses 88.8% 86.3% Depreciation
and amortization 5.3% 5.3% Total cost of sales, operating expenses
and depreciation and amortization 94.1% 91.6% ---------- ----------
General and administrative expense 7.1% 7.2% ---------- ----------
(Stated as a percentage of revenue) *T -0- *T Champps
Entertainment, Inc. Selected Balance Sheet Information (In
thousands) (Unaudited) October 1, July 2, 2006 2006 ----------
-------- Cash and cash equivalents $7,742 $9,449 Current assets
23,531 24,869 Total assets 134,151 136,702 Current liabilities
11,300 13,377 Debt 14,757 14,707 Total shareholders' equity 76,291
76,728 *T -0- *T Champps Entertainment, Inc. Selected Cash Flow
Information (In thousands) (Unaudited) Three Months Ended
--------------------- October 1, October 2, 2006 2005 ----------
---------- Net cash provided by (used in) operating activities
$(277) $485 Net cash used in investing activities (857) (1,280) Net
cash provided by (used in) financing activities (573) 369
---------- ---------- Net change in cash and cash equivalents
$(1,707) $(426) ========== ========== *T
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