Shares of J. Alexander’s Holdings jumped more than 20 percent Friday after the restaurant company’s leaders said sales have rebounded to within 10 percent of last year’s and cash flows are on track to turn solidly positive in the coming weeks.
Like much of the restaurant sector — particularly higher-end sit-down concepts — Nashville-based J. Alexander’s saw its sales plummet this spring as the spread of COVID-19 paralyzed large parts of the economy. Second-quarter sales at its flagship-branded locations fell 55 percent in the second quarter.
July brought a solid improvement to a year-over-year drop of about 25 percent and those numbers have steadily improved since. Through the first three bookkeeping weeks of J. Alexander’s September, average weekly sales were down just 10 percent versus the same time last year — even though safety restrictions mean the company only has about 57 percent of total seats available at its 46 restaurants, leaving carryout business to pick up a lot of slack.
“August was a critical month for our recovery efforts and represented a key turning point,” President and CEO Mark Parkey said Friday. “Our sales trends, improving margins and our ability to maintain our carry out volumes even as the dining rooms have generated steadily increasing sales, all indicate that the worst of the storm has passed.”
Parker and his team expect J. Alexander’s to produce positive adjusted EBITDA this quarter — from a Q2 loss of $7.4 million — and expect to at least break even on a cash flow basis, albeit with a little help from the sale of an Ohio store. For the fourth quarter, though, J. Alexander’s executives are forecasting positive cash flows of at least $400,000 per week, or more than $5 million in all. The company had negative cash flows of $3.8 million in the first six months of the year versus a positive $5.5 million in the first half of 2019.
“There will be winners and losers when the pandemic is over and our goal from the very beginning has been to be one of the winners,” Parkey said. “We are well-positioned to achieve our goal and to do so sooner than we had originally envisioned.”
J. Alexander’s shares (Ticker: JAX) rose 21.6 percent to $5.81 Friday, climbing steadily during the session on volume that was nearly four times its daily average. They started the year around $9, fell to $3 in March and hadn’t gained back much of those losses since.