Kura Sushi USA(US:KRUS)2026-01-07 23:02Financial Data and Key Metrics Changes - Total sales for the fiscal first quarter were $73.5 million, compared to $64.5 million in the prior year period, representing a year-over-year increase of approximately 12.4% [9] - Comparable sales growth was negative 2.5%, with a negative traffic of 2.5% and flat price and mix [9] - Adjusted net loss was $2.8 million, or negative $0.23 per share, compared to an adjusted net loss of $1 million, or negative $0.08 per share in the prior year quarter [13] - Restaurant-level operating profit as a percentage of sales was 15.1%, compared to 18.2% in the prior year quarter [13] Business Line Data and Key Metrics Changes - The company opened four new restaurants in the first quarter and has 10 units under construction, including locations in new markets [7] - Labor as a percentage of sales improved to 32.5% from 32.9% in the prior year period due to operational initiatives [6] - Cost of goods as a percentage of sales increased to 29.9% from 29% in the prior year quarter, impacted by tariffs [10] Market Data and Key Metrics Changes - Comparable sales in the West Coast market were negative 2.8%, while the Southwest market saw negative 2.7% [9] - The company expects full-year costs to stabilize around 30% after considering tariffs and menu price adjustments [6] Company Strategy and Development Direction - The company aims to open 16 new restaurants in fiscal 2026, maintaining an annual unit growth rate above 20% [13] - Marketing efforts include a campaign with Kirby, coinciding with the release of Kirby Air Riders for Switch 2, and the introduction of a reservation system decoupled from the rewards program [7][8] - The company is focused on aggressive cost management, reducing G&A as a percentage of sales by 80 basis points on an adjusted basis [5] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving positive comparable sales for the year, citing strong performance in November and December [25] - The company anticipates that the pricing taken in November will continue to support sales growth and improve traffic [25] - Management noted that the broader industry is showing signs of improvement, which is encouraging for future performance [53] Other Important Information - The company has $78.5 million in cash, cash equivalents, and investments, with no debt [13] - General and administrative expenses as a percentage of sales were 13%, down from 13.5% in the prior year quarter [11] Q&A Session Summary Question: What led to the decision to decouple the reservation system from loyalty? - Management noted that more than half of visits by rewards members are through the reservation system, indicating better-than-expected uptake [20] Question: Do you expect positive comps in the February quarter? - Management confirmed expectations for positive comps in Q2, supported by strong performance in November and December [25] Question: How long would it take for tariff relief to impact financials? - Management indicated it would take 60 to 90 days to see benefits from reduced tariffs due to inventory turnover [30] Question: Can you comment on the impact of tariffs on other expense lines? - Management stated that tariffs have significantly impacted promotional costs, particularly for items sourced from overseas [100] Question: How are rewards members performing in terms of spending? - Management reported that rewards members spend about $6 more per person compared to non-members, with a significant increase in visit frequency [75] Question: What are the future planned promotions for the year? - Upcoming promotions include Sanrio for February and Jujutsu Kaisen for March and April [108]