On July 9, 2024, Kura Sushi USA Inc (KRUS, Financial) released its 8-K filing announcing the financial results for the fiscal third quarter ended May 31, 2024. Kura Sushi USA Inc is a Japanese restaurant company operating revolving sushi chain restaurants in the United States, offering a unique dining experience with a variety of dishes and innovative technology.
Performance Overview
Kura Sushi USA Inc reported total sales of $63.1 million for the third quarter of 2024, aligning with the analyst estimate of $63.10 million. This represents a significant increase from $49.2 million in the same quarter of 2023. However, the company reported a net loss of $0.6 million, or $(0.05) per diluted share, falling short of the analyst estimate of $0.01 earnings per share. This is a notable decline from the net income of $1.7 million, or $0.16 per diluted share, reported in the third quarter of 2023.
Key Financial Metrics
Despite the increase in sales, Kura Sushi USA Inc faced several challenges impacting its profitability. The operating loss for the quarter was $1.2 million, compared to an operating income of $1.3 million in the same period last year. The adjusted net income was a mere $4,000, or $0.00 per diluted share, compared to $1.7 million, or $0.16 per diluted share, in the third quarter of 2023.
| Metric | Q3 2024 | Q3 2023 |
|---|---|---|
| Total Sales | $63.1 million | $49.2 million |
| Net (Loss) Income | $(0.6) million | $1.7 million |
| Operating (Loss) Income | $(1.2) million | $1.3 million |
| Adjusted EBITDA | $4.5 million | $5.1 million |
Operational Highlights
During the fiscal third quarter, Kura Sushi USA Inc opened four new restaurants, expanding its footprint in Orlando, Florida; Atlanta, Georgia; Scarsdale, New York; and Roseville, California. The company also reported a slight increase in comparable restaurant sales by 0.6% compared to the same quarter last year.
Cost Analysis
Food and beverage costs as a percentage of sales decreased to 29.2% from 30.0% in the third quarter of 2023, primarily due to menu price increases and supply chain initiatives. However, labor and related costs rose to 32.3% of sales from 29.2%, driven by higher wage rates and pre-opening labor costs. General and administrative expenses increased to $8.9 million from $7.0 million, mainly due to professional fees, litigation accruals, and compensation-related costs.
Financial Position
As of May 31, 2024, Kura Sushi USA Inc reported cash and cash equivalents of $59.4 million, down from $69.7 million as of August 31, 2023. Total assets stood at $324.7 million, with total liabilities of $158.3 million and total stockholders' equity of $166.4 million.
Management Commentary
"We believe the current headwinds are macro-driven and transitory, but with the difficulty in predicting the duration of macroeconomic shifts, we believe the most prudent course of action is to position ourselves to be able to continue to deliver strong financial results and uninterrupted progress on our core strategic goals of at least 20% annual unit growth, G&A leverage, and operational excellence regardless of the broader economic environment. While the third quarter results were unexpected, nothing has changed about Kura Sushi’s tremendous potential." - Hajime Uba, President and Chief Executive Officer of Kura Sushi.
Conclusion
While Kura Sushi USA Inc demonstrated robust sales growth, the company faced challenges in maintaining profitability, reflected in the net loss and increased operating expenses. The company's strategic expansion and cost management initiatives will be crucial in navigating the current economic environment and achieving long-term growth.
For more detailed information, please refer to the full 8-K filing.
Explore the complete 8-K earnings release (here) from Kura Sushi USA Inc for further details.
