Amid a challenging casual dining environment, the second quarter was mixed for Kona Grill (NASDAQ:KONA), as overall sales grew, but same-store sales, a closely-watched metric comparing sales at restaurants open for more than one year, declined.
After opening one new store during the quarter ended June 30, Kona Grill owns and operates 46 locations in 23 states and Puerto Rico, serving an array of meals ranging from New York strip to jambalaya to sushi. The Scottsdale, AZ-based company also has international franchise partners in Mexico, the United Arab Emirates and Canada working to open their first restaurants this year.
No more stores are planned to be opened this year and only one is planned for 2018, as the company looks to rein in spending.
For the quarter, restaurant sales rose 8.5% to $47.0 million, versus $43.3 million in Q2 2016. Same-store sales fell 5.3% after increasing 2.5% in the year-earlier quarter. Management noted a 4.6% decline in guest traffic and what it called an "unfavorable menu mix" as reasons for the drop. Higher prices, helped offset the contraction, although its hard to discern how much that may have dissuaded guest traffic, too.
Net loss expanded to $4.3 million, or 43 cents per share, from $800,000, or eight cents per share, in the second quarter last year. A number of factors influenced the steeper loss, including $1.9 million in write-offs and lease termination costs associated with abandoning plans to open a store in El Segundo, CA and amending a credit agreement, among other things.
Looking ahead, Kona forecast restaurant sales of $184.0 million and adjusted EBITDA, which doesn't include termination costs or asset write-offs, of $5.5 million for the year.
Investors are not happy with the financial performance or forward-looking guidance. Shares of KONA are getting roughed up to the tune of a 26.4% loss to trade at $1.95 per share as the closing bell approaches. That's the lowest level for the stock since recovering from the bottom of the Great Recession early in 2009.
