Landry's Profits Tumble

The locally based hospitality chain reported that net income for the three months ending June 30, 2006 was off by nearly $8 million, dropping from $17.5 million, or 78 cents per share in the prior year's quarter to $9.6 million, or 43 cents per share. Revenues for the quarter rose by approximately $65 million, increasing from $325.2 million in last year's second quarter to $390.1 million.

The company, which operates 311 full service restaurants under the trade names Joe's Crab Shack, Landry's Seafood House, the Crab House, Charley's Crab, Chart House, the Rainforest Cafe and Saltgrass Steak House, said the biggest impact on profits was a $15.5 million net-interest expense associated with the firm's $850 million refinancing in the fourth quarter of 2004 in preparation for its acquisition of the Golden Nugget. That expense was only $8.6 million in the second quarter of 2005, company execs said.

Also impacting the bottom line was $8.8 million in asset impairment and store closing charges related to the closing of several underperforming Joe's Crab Shack restaurants. Stock compensation expenses of 4 cents per share also drove down profits.

Tilman Fertilla, chairman, president and CEO said in a conference call with investors and analysts that despite the numbers, same-store sales, excluding the Golden Nugget, were up by nearly 1% for the quarter despite softer sales at Joe's Clam Shack."Most of our concepts performed at or above our expectations for the second quarter," Fertilla said. "Sales continue to be positive despite the trends most other restaurants are seeing today."

Fertilla said the nation's second largest seafood restaurant chain opened 11 new restaurants in the first six months of 2006, including the Tower of Americas in San Antonio and a new, dinosaur-themed concept, the T-Rex Cafe in Kansas City, KS. The firm also operates several limited-service restaurants, hotels, amusements and retail outlets.