Sonic shares plunge in after-hours trading as company reports slower 3rd-quarter sales
Shares in Sonic Corp. plunged more than 6 percent in after-hours trading Thursday after the Oklahoma City company missed third-quarter revenue expectations and sales growth projections.
In the company's third fiscal quarter, Sonic reported net income declined to $15.4 million, or 31 cents per share, down 18 percent from the same period a year ago.
Same-store sales grew 2 percent systemwide for the quarter. The company opened 16 new franchise drive-ins during the quarter.
New refranchising initiative
Also Thursday, the company announced a new refranchising initiative to move toward a roughly 95 percent franchised system by the end of fiscal year 2017.
About 90 percent of Sonic's 3,500 drive-in locations are franchisee-operated.
Sales were slower in April and May in part because of bad weather, but the decline also reflects an overall slowing in the market, Sonic CEO Cliff Hudson said during a conference call Thursday.
"While the consumer environment has weakened, Sonic remains focused on delivering one of the most differentiated customer experiences in the quick-service industry," Hudson said.
The overall fast-food industry is experiencing a slowdown, Sonic Chief Financial Officer Claudia San Pedro said during the call.
"We are in a more volatile consumer market and we have less visibility," San Pedro said.