Benihana loses $1.1M in 2Q, withdraws '10 guidance

AP News
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Posted: Nov 24, 2009 5:45 PM

Restaurant operator Benihana Inc. said Tuesday it moved to a loss in the second quarter, and it withdrew its previous forecast for 2010 profit.

Benihana, which operates the nation's largest chain of sushi and Japanese-theme restaurants, is struggling like many restaurant companies as consumers spend less on eating out.

The company, based in Miami, also said it had breached a leverage-ratio requirement under a line of credit issued by Wachovia NA, which has agreed to amend the terms of the loan by lowering the available balance.

To address its liquidity, Benihana said a board committee has authorized selling new shares for up to a total of $30 million. It will also seek more financing.

In addition to Benihana restaurants, the company runs the Haru and RA Sushi chains.

Last month the company suspended its 2010 profit guidance after reporting that second-quarter sales at stores open at least a year fell 10 percent. Sales at locations open at least a year are a key indicator of stores' and restaurants' financial health because they gauge existing locations and exclude the effect of opening and closing stores.

CEO Richard Stockinger said, "We experienced a lower-than-expected comparable-sales trend, which pressured our operating margins."

Benihana withdrew its forecast for annual profit on Tuesday. It had said it would earn 40 cents to 45 cents per share in fiscal 2010, KeyBanc Capital Markets analyst Brad Ludington said in October.

The company lost $1.1 million, or 7 cents per share, in the quarter that ended Oct. 11. That compares with a profit of $1.7 million, or 11 cents per share, a year earlier.

Analysts had expected the company to earn 5 cents per share.

Revenue fell less than 1 percent to $69.3 million from $70 million.

Benihana shares fell 2 cents to close Tuesday at $5.19.