DavCo's net income up by 48.7% in 1st quarter

January 25, 1995|By Ross Hetrick | Ross Hetrick,Sun Staff Writer

Boosted by the acquisition of a Wendy's chain in Nashville, Tenn., and the building of more than a dozen new stores, net income for DavCo Restaurants Inc. climbed by 48.7 percent during its first quarter.

However, the Crofton-based Wendy's franchisee saw sales at restaurants open for a year or more decline by 1.3 percent, as competitors offered special price promotions.

"Our competitors are pricing quite low right now," said Danielle M. Paul, DavCo's spokeswoman. "We're trying to take a stand on not taking that approach at this time."

DavCo is the largest Wendy's franchisee with 212 restaurants in Maryland, northern Virginia, Washington, metropolitan St. Louis, central Illinois and the Nashville area.

The company's stock closed yesterday at $13 a share, unchanged.

Much of the increase in the quarter resulted from the Sept. 24 acquisition of Southern Hospitality Corp., a Tennessee Wendy's franchise with 35 restaurants. In the first quarter, these restaurants had a net income of $301,000, or 4 cents per share, on sales of $9.1 million, Ms. Paul said.

The figures were also better because the fiscal quarter, which ended Dec. 31, was 14 weeks long compared to 13 weeks for the previous first quarter. This added earnings of about $193,000, or 3 cents a share, on sales of $3.9 million.

Even without Southern Hospitality and the additional week, DavCo earnings would have jumped by 21.5 percent to $2.2 million, or 31 cents a share, on sales of $41 million.

"We are very pleased with our earnings per share for the quarter . . . despite continued pressure on sales caused by heavy discounting by competitors," Ronald D. Kirstien, DavCo's chairman, president and chief executive officer, said.

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