Gourmet Sandwiches Lift Jack in the Box’s Earnings

Jack in the Box Inc., which operates more than 1,900 namesake hamburger restaurants, said Tuesday that its fiscal second-quarter earnings rose 20% because of lower beef costs and strong sales from a line of gourmet sandwiches.

Net income for the quarter ended April 11 rose to $19.6 million, or 53 cents a share, from $16.3 million, or 44 cents, a year earlier. Sales rose 12% to $517.3 million, the San Diego company said.

The company’s three Pannido sandwiches, introduced in February, helped boost sales at stores open at least a year by 8.2%, the biggest such increase in 18 quarters, Chief Executive Robert Nugent said. Lower-than-expected labor and commodity costs and a decrease in the income tax rate also contributed to the improved results.

Jack in the Box has been moving toward a mix of higher-priced products and new low-fat premium selections. The company is reducing its reliance on discounting and trying to update the brand and attract more customers.

“The industry is very mature. It’s very crowded, and the opportunity for growth is limited, if at all,” Nugent said in a conference call with analysts and investors. “In order to grow the business, you have to learn how to differentiate yourself. That’s the whole reason for getting into the strategy we’re in.”

Jack in the Box had forecast second-quarter profit of 42 cents to 44 cents a share. Analysts had expected 43 cents, according to a survey by Thomson First Call.

Shares in the company rose 24 cents to $27.22 on the New York Stock Exchange. They have risen 27% this year.

Jack in the Box, which also operates more than 130 Qdoba Mexican Grill restaurants, said it expected earnings for its fiscal third quarter ending July 4 to decline to 53 cents from 54 cents a year earlier because of higher expenses and smaller gains from conversions of company restaurants to franchises. The estimate is higher than the 45-cent average forecast of analysts in a Thomson First Call poll.

The company opened 14 Jack in the Box restaurants and seven Qdoba outlets in the quarter, boosting its total to 2,111. Two restaurants in San Diego were remodeled as part of a “brand-reinvention” program. The remodeling, featuring new designs, the JBX name and upgraded menus, will be expanded to Boise, Idaho, and Bakersfield by the end of the year.

Jack in the Box raised its earnings forecast for its fiscal year to $1.99 a share from $1.68. The company expects a same-store sales increase of 4% to 4.5% for the year. Same-store sales are an important measure of a company’s performance because they exclude results from new and closed stores.