J. Alexander’s Holdings, Inc. reported financial results for the fourth quarter and full year of fiscal 2015 ended January 3. Fiscal 2015 included 53 weeks as compared to 52 weeks in fiscal 2014 and the fourth quarter of fiscal 2015 included 14 weeks as compared to 13 weeks in the corresponding period of fiscal 2014. In addition, as a result of the fiscal year ending on the Sunday closest to December 31, fiscal 2015 included two New Year’s holiday periods, one during the first quarter and another during the fourth quarter of fiscal 2015, while fiscal 2014 included one New Year’s holiday period during the first quarter of that year.

Fourth Quarter 2015 Highlights Compared To The Fourth Quarter Of 2014

Net sales increased $5,992,000 to $59,304,000, or 11.2 percent. The extra week in the 2015 quarter included the New Year’s holiday period and contributed $5,030,000 of net sales, which increased net sales for the quarter by 9.4 percent compared to the fourth quarter of 2014.

For the J. Alexander’s/Redlands Grill restaurants, average weekly same store sales per restaurant were up 1.4 percent to $111,600, and for the Stoney River Steakhouse and Grill restaurants, average weekly same store sales increased by 6.2 percent to $77,300. Excluding the impact of the extra week included in the fourth quarter of 2015, average weekly same store sales per restaurant for the J. Alexander’s/Redlands Grill restaurants were $109,900, representing a 0.2 percent decrease compared to the average of $110,100 in the 13 weeks represented by the fourth quarter of 2014, and average weekly same store sales per restaurant for the Stoney River Steakhouse and Grill restaurants were $76,200, representing a 4.7 percent increase compared to the average of $72,800 during the 13 weeks included in the corresponding period of 2014.

Income from continuing operations before income taxes reached $4,033,000 during the fourth quarter of 2015 compared to $2,471,000 in the fourth quarter of 2014. The 2015 results include an additional $812,000 in income related to the impact of the extra week of operations during the fourth quarter. These results were impacted by non-recurring transaction expenses associated with a planned initial public offering in 2014 and the ultimate spin-off from Fidelity National Financial Ventures, LLC (FNFV) in 2015, of $870,000 and $459,000 in the fourth quarter of 2015 and 2014, respectively.

Net income for the fourth quarter of 2015 totaled $2,321,000, up 5.9 percent from net income of $2,192,000 in the fourth quarter of the prior year.

Basic and diluted earnings per share totaled $0.15 for both the fourth quarter of 2015 and 2014, respectively. In computing earnings per share, weighted average common shares outstanding are based on the number of shares outstanding at the date of the company’s spin-off from FNFV as if all shares had been outstanding since December 30, 2013.

Restaurant Operating Profit Margin was 17.1 percent for the fourth quarter of 2015 as compared to 15.6 percent in the fourth quarter of 2014.

Cost of sales as a percentage of net sales in the fourth period of 2015 improved to 31.4 percent from 32.2 percent during the fourth quarter a year ago.

“Our fourth quarter results again yielded increased same store sales in our J. Alexander’s/Redlands Grill restaurants and in our Stoney River Steakhouse and Grill restaurants,” says Lonnie J. Stout, II, president and chief executive officer of the company.

“While we were satisfied with our overall performance, sales in the fourth quarter were impacted somewhat by a slowdown in sales at certain J. Alexander’s/Redlands Grill restaurants located near malls and in heavy retail areas. Historically during the holiday season, which runs from Thanksgiving through Christmas Eve, we have benefitted from guests having late lunches and early dinners as a result of shopping trips. The frequency of guest visits to our restaurants was high. However, in recent years, we have noticed a softening in sales during the late weeks of the fourth quarter as online retail shopping has increased. This trend had an unfavorable impact on guest counts and on holiday sales this past year at some J. Alexander’s/Redlands Grill restaurants operating in heavy retail traffic areas.”

Stout says that the company was also pleased with the continued improvement in restaurant operating profit during the most recent quarter. “This is another important measure of operating efficiency and includes restaurant profits after all occupancy costs, but before any corporate general and administrative expenses.” 

Restaurant operating profit climbed to $10,166,000 in the fourth quarter of 2015 from $8,306,000 in the final quarter of the previous year. This was a 22.4 percent increase and included an extra week, which had an estimated favorable impact of $1,167,000.

For the quarter ended January 3, 2016, the company continued to reduce its cost of sales as a percent of net sales, which were down from 32.2 percent in the final quarter of 2014 to 31.4 percent in the most recent quarter. Restaurant labor and related costs as a percent of net sales were also down to 29.3 percent as compared to 29.6 percent in the fourth period a year earlier, while other restaurant operating expenses decreased to 18.6 percent of net sales as compared to 19.0% percent of net sales in the final quarter of 2014.

Stout says that average weekly guest counts within the same store base for the company’s Stoney River Steakhouse and Grill restaurants were up 5.9 percent for the fourth quarter of 2015. Guest counts within the same store base at the company’s combined J. Alexander’s/Redlands Grill concepts decreased 0.9 percent in the most recent quarter and reflected the previously mentioned slowdown in retail traffic in mall and heavy retail areas during the traditionally busy holiday season. 

Average guest checks, which include alcoholic beverage sales, for the combined J. Alexander’s/Redlands Grill concepts increased 2.3 percent to $31.08 in the fourth quarter of 2015. Average guest checks for the Stoney River Steakhouse and Grill concept were up 0.3 percent to $47.12 in the fourth quarter of 2015. The effect of menu price increases for the quarter just ended was estimated to be 1.7 percent for the J. Alexander’s/Redlands Grill restaurants and 2.4% for the Stoney River Steakhouse and Grill restaurants compared to the same period a year earlier.

For the 53 weeks of fiscal 2015, the company posted net sales of $217,914,000, up 7.8 percent from $202,233,000 reported during the 52 weeks of fiscal 2014. Income from continuing operations before income taxes was $7,339,000 for 2015 compared to $9,286,000 for 2014. Excluding non-recurring transaction expenses of $7,181,000 and $785,000 in 2015 and 2014, respectively, income from continuing operations before income taxes would have totaled $14,520,000 for 2015 compared to $10,071,000 for 2014. The company recorded net income of $5,355,000 for 2015 compared to $8,515,000 in 2014.

Average weekly same store sales per restaurant for 2015 were up 3.7 percent to $111,000 for the J. Alexander’s/Redlands Grill restaurants, and for the Stoney River Steakhouse and Grill restaurants, average weekly same store sales increased by 6 percent to $70,200. Excluding the impact of the extra week in 2015, average weekly same store sales per restaurant totaled $110,600 for the J. Alexander’s/Redlands Grill restaurants, an increase of 3.4 percent, and $69,700 for the Stoney River Steakhouse and Grill restaurants, an increase of 5.3 percent, compared to the corresponding periods of 2014, respectively.

Average weekly guest counts within the same store base of restaurants increased by 0.1 percent within the J. Alexander’s/Redlands Grill restaurants and by 4.4% within the Stoney River Steakhouse and Grill restaurants in 2015 compared to 2014. The average guest check at the combined J. Alexander’s/Redlands Grill locations increased by 3.7 percent to $30.77 during 2015 and the Stoney River average guest check increased by 1.5 percent to $45.99. Management estimates that the effect of menu price increases for 2015 totaled 2.9 percent at J. Alexander’s/Redlands Grill locations and 2.8 percent at the Stoney River restaurants for 2015.

Cost of sales as a percent of net sales for 2015 was 31.6 percent, down from 31.9 percent in 2014. Restaurant labor and related costs for 2015 decreased to 30.2% of net sales from 30.4 percent of net sales in 2014, and other restaurant operating expenses decreased to 19.8 percent of net sales during 2015 from 20 percent of net sales in 2014. Restaurant operating margins for 2015 totaled 14.7 percent, up from 13.9 percent in 2014.

Cash flow from operations totaled $16,010,000 during 2015 compared to $17,955,000 in 2014. Capital expenditures for 2015 totaled $11,431,000 compared to $10,536,000 during fiscal 2014.