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February 9, 2010 |
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| October 30, 2009 |
By: Review staff & wire services |
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s one South Florida-based company got a boost from the U.S. “cash for clunkers” program, two others probably wished Washington had provided cash for burgers or office supplies.
Fort Lauderdale’s AutoNation, the nation’s largest automotive retailer, said Thursday it made money in the third quarter and credited the federal sales incentive program for its rebound from a loss in the year ago period.
The quarter was a disappointment for two other local companies with cutbacks in consumer spending and no access to incentive schemes.
Miami-based Burger King reported a 6.4 percent decline in earnings, while Boca Raton’s Office Depot said its third-quarter loss widened year over year on restructuring charges and a continued sales slump.
Shares of AutoNation (NYSE: AN) stayed at $18.09. Burger King (NYSE: BKC) rose 0.06 percent to $17.30. Boca Raton-based Office Depot (NYSE: ODP) rose to $6.45, or 9.14 percent.
Although retailers of all varieties are struggling, the auto industry got a lift from the clunkers program. Auto makers and dealers said the summer stimulus plan spurred sales of nearly 700,000 new vehicles during the summer months. Big rebates attracted many buyers who otherwise would have waited until later in the year to visit dealerships.
AutoNation chief executive officer Mike Jackson said the program was a signal to consumers that it was safe to begin to buy again.
“It was like a government seal of approval, like it’s safe to come into the marketplace and buy a vehicle, that we’re over the abyss we were staring into for six months or nine months where everybody was scared to death whether Armageddon was finally here,” Jackson said in an interview with The Associated Press.
The program, Jackson said, was a shot in the arm for the industry. It helped restart manufacturing and cleared car lots of unsold vehicles.
“It’s like a clean slate, so while we’re still at a very low level, all these things give me optimism for the future,” Jackson said.
The company said it earned $65 million, or 36 cents per share, in the three months ended Sept. 30. It lost $1.41 billion, or $7.99 per share, due to big asset write-downs in the same quarter last year.
AutoNation said sales fell 13 percent to $2.92 billion from $3.36 billion a year ago, but said its new vehicle unit sales decline was in line with industry figures from CNW Research.
For the quarter, the company said domestic segment income was $34 million compared with $25 million in the year-ago period, with a 11 percent decline in new vehicle sales.
Income from imported vehicles rose to $63 million from $52 million last year, with a 12 percent drop in new vehicle sales. Premium luxury income was $44 million compared with $43 million a year ago, with a 19 percent slip in new vehicle sales.
AutoNation said its domestic and import segments benefitted most from the clunkers program.
Expenses fell about 10 percent to $380 million compared with the year-ago period.
The company also said its board authorized an additional $250 million for the repurchase of its common stock. AutoNation purchased 3.7 million shares in the third quarter for $65.8 million, or an average of $17.81 a share.
Burger King
Burger King blamed rising unemployment — which reached 9.8 percent nationally in September — for keeping customers away from its restaurants. It also noted it lost sales from competitors who slashed prices to lure deal-hunting diners.
Burger King said it earned $46.6 million, or 34 cents per share, during the three months that ended Sept. 30. A year earlier, it earned $49.8 million, or 36 cents per share.
The nation’s second-biggest fastfood chain also said its profit was dragged down by 2 cents per share because of changes in foreign currencies.
Burger King said sales in locations open at least a year, an important restaurant performance measure, fell 2.9 percent. Revenue sank 5 percent to $636.9 million from $673.5 million.
Sales in the U.S. and Canada fell more than some analysts predicted even as Burger King offered deals including a $1 Whopper Jr. and two chicken sandwiches for $4 to lure budget-minded diners. Strong orders in the U.K., Australia and Korea tempered declines in Latin America, where the H1N1 flu outbreak damapened business.
“While we continue to operate in a rapidly changing and difficult consumer environment, our business model remains solid as we manage the brand for the long-term,” chairman and CEO John Chidsey said in a statement.
The results were worse than Wall Street forecasts. Analysts expected Burger King to earn 37 cents per share on revenue of $652.8 million.
Office Depot
Office Depot said a pullback in spending by both consumers and small businesses on all items, especially large-ticket ones such as furniture and computers, hurt sales. The company continued to reduce markdowns on some low-margin categories.
The loss for the quarter ended Sept. 26 totaled $413 million, or $1.51 per share, compared with a loss of $6.7 million, or 2 cents per share in the same period last year.
Excluding one-time items, including charges related to restructuring, net loss was 8 cents per share.
Revenue fell 17 percent to $3 billion from $3.66 billion last year.
North American retail division sales fell 18 percent to $1.3 billion, hurt partly by having 117 fewer stores open than a year ago. Sales in stores open at least one year, a key retail metric, fell 14 percent in the quarter.
North American Business Solutions sales fell 16 percent to $880 million, while international sales fell 16 percent to $861 million. Without the effect of foreign currency, international sales fell 9 percent. Without the effect of foreign currency, total Office Depot sales fell 15 percent.
This story includes reporting from The Associated Press and Bloomberg News.
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