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Free Hospitality Publications
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Restaurant Industry News
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Tuesday October 24th, 2006 |
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Landry's to Sell 120 of Their Joe's Crab Shack Restaurants
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Landry's Restaurants, Inc. (NYSE: LNY) today announced it entered into a definitive agreement to sell 120 of its Joe's Crab Shack restaurants to JCS Holdings, LLC. |
The sales price is approximately $192 million, including the assumption of certain working capital liabilities. The remaining 23 Joe's Crab Shack restaurants will either be converted to another Landry's concept, operated under a license agreement with JCS Holdings, LLC or closed and sold. The transaction is expected to close in the fourth quarter of 2006, subject to customary closing conditions.
Tilman J. Fertitta, Chairman, President and Chief Executive Officer stated, "Joe's has been an important part of our growth over the years. We are now going in a different strategic direction, focused more on our higher end restaurants, hospitality and gaming assets. Joe's just does not fit well in our future plans."
Same store sales for the Company in the third quarter were positive approximately 1.0%, including a negative 8.0% same store sales for the Joe's Crab Shack division. These results reflect the strength of the Company's higher end brands as well as the difficulties experienced by the lower price point casual dining segment.
Charges associated with the sale of Joe's Crab Shack restaurants held for sale will be presented in the Company's financial statements as discontinued operations. The impairment and other charges associated with the Joe's Sale will result in an after tax charge of approximately $35.0 million to $37.0 million in the third quarter. Impairment and other charges associated with the Joe's restaurants held for conversion to another Landry's concept, approximating $6.0 million after tax, will be included in income from continuing operations.
Rick H. Liem, Senior Vice President and Chief Financial Officer said, "Primarily as a result of the impairment and other charges associated with the Joe's Sale and poor earnings performance by Joe's for the quarter, the Company's earnings per share estimates for the third quarter and full year 2006 are no longer applicable. The loss for the third quarter is estimated to range from $1.65 to $1.85 per share diluted. Despite the Company's third quarter performance, management is comfortable with analyst estimates for the fourth quarter on a proforma basis for continuing operations."
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