Denny's Corporation DENN has announced selected preliminary financial results for the fourth quarter and fiscal 2024 (ended Dec. 25, 2024). It owns and operates Denny's Inc. and Keke's Inc. brands.
Per Kelli Valade, chief executive officer, “We continued our positive momentum through the fourth quarter by delivering solid domestic system-wide same-restaurant sales and outpacing both Denny’s and Keke’s respective BBI indices. Keke’s development also accelerated, as we opened eight new cafes and entered four new states.”
The company expects to release its fourth-quarter and fiscal 2024 results on Feb. 12, 2025, before market open.
DENN stock inched up 0.2% during the trading hours but lost 2.1% in the after-hours trading session on Monday.
DENN’s Q4 Fiscal 2024 Preliminary Results
As the company operates through two reportable segments, as mentioned above, the results will be discussed segment-wise.
Under Denny’s brand, domestic system-wide same-restaurant sales are expected to be 1.1%, sequentially up 120 basis points (bps) but down from 1.3% reported a year ago. Domestic franchise same-restaurant sales are expected to be 1.2%, down from 1.5% reported a year ago. The company's same-restaurant sales are expected to be breakeven compared with a decline of 1.2% reported a year ago. Furthermore, average unit sales value at company and franchised restaurants are expected to be $800 million and $482 million, up year over year from $770 million and $467 million, respectively.
Under Keke’s brand, the domestic system-wide same-restaurant sales are expected to be 3% against the year-ago quarter’s 3.1% decline. The brand’s domestic franchise same-restaurant sales are expected to be up year over year at 4.1% against 3.8% decline. The company's same-restaurant sales are expected to decline 3.7% against 0.7% growth reported in the year-ago quarter. Moreover, average unit sales value at company and franchised restaurants are expected to be $404 million and $447 million compared with $442 million and $432 million reported a year ago, respectively.
DENN’s FY2024 Preliminary Results
Under Denny’s brand, domestic system-wide same-restaurant sales are expected to inch down 0.2% (compared to the guidance range of (1)% and 0%) against 3.6% growth reported in fiscal 2023. Domestic franchise same-restaurant sales are expected to be down 0.1% against 3.6% growth reported a year ago. The company's same-restaurant sales are expected to decline 1.5% against 2.7% growth a year ago. Furthermore, average unit sales value at company and franchised restaurants are expected to be $3.09 billion and $1.88 billion, up year over year from $3.07 billion and $1.84 billion, respectively.
Under Keke’s brand, the domestic system-wide same-restaurant sales are expected to decline 1.7% compared with 3.9% decline reported in fiscal 2023. The domestic franchise same-restaurant sales are expected to be down year over year at 1.6% compared with 4.4%. The company's same-restaurant sales are expected to decline 2.7% compared with 1.1% decline reported a year ago. Moreover, average unit sales value at company and franchised restaurants are expected to be $1.73 billion and $1.82 billion, down year over year from $1.80 billion and $1.83 billion, respectively.
The borrowings under the credit facility at the end of fiscal 2024 are anticipated to be $261.3 million. The company expects to attain adjusted EBITDA at the low end of its reported guidance between $81 million and $84 million.
DENN’s Unit Expansion Details
During the fiscal fourth quarter, Denny’s expects to open four franchised restaurants and close 30 of them as part of the planned acceleration of lower volume restaurant closures. Moreover, the Denny’s Diner 2.0 remodel program is expected to complete six remodeling projects. During the quarter, Keke’s is likely to open three company restaurants and five franchised restaurants with the debut in four states including California, Colorado, Nevada and Texas. The brand is also expected to expand its first-ever remodel test program to two additional cafes.
The total openings under the Denny’s and Keke’s brands at the end of fiscal 2024 are anticipated to be 14 and 12, respectively. Denny’s expects to close 88 restaurants and complete 23 remodels under its Denny’s Diner 2.0 remodel program, including seven company restaurants. The Keke’s brand is likely to have expanded into six new states during the fiscal year.
The guidance provided by DENN highlighted consolidated restaurant openings between 30 and 40, including 12-16 new Keke's restaurants, with a consolidated net decline of 45-55.
DENN Stock Price Performance
Shares of this American full-service restaurant chain have lost 13.2% in the past three months compared with the Zacks Retail - Restaurants industry’s 5.6% decline. The softness in average unit sales across both the reported brands and increased commodity costs are concerning for DENN’s prospects. However, its continuous efforts to drive incremental traffic through menu innovation, off-premises expansion and marketing strategies are encouraging. Also, the focus on improving operational efficiency and creating value for shareholders bodes well.
Zacks Investment Research
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The Zacks Consensus Estimate for DENN’s fiscal 2025 earnings per share (EPS) has remained unchanged at 58 cents over the past 60 days. However, the estimated figure indicates 11.5% growth from the year-ago quarter’s figure. Its growth prospects are further solidified by a VGM Score of B, backed by a Value Score of A. The positive trend signifies bullish analysts’ sentiments, robust fundamentals and the prospects of an outperformance in the near term.
DENN’s Zacks Rank & Other Key Picks
Denny’s currently carries a Zacks Rank #2 (Buy).
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