By Martinne Geller
NEW YORK (Reuters) - Burger King Holdings Inc
Burger King is more vulnerable to a weak job market than rivals McDonald's Corp
The company said on Tuesday that high U.S. unemployment and government austerity programs in several European countries would weigh on same-restaurant sales.
The second-biggest U.S. hamburger chain after McDonald's said net income fell to $49 million, or 36 cents a share, in the fourth quarter ended June 30 from $58.9 million, or 44 cents a share, a year earlier.
Analysts on average were expecting earnings of 34 cents per share, according to Thomson Reuters I/B/E/S.
Burger King said foreign currency exchange rates reduced fourth-quarter earnings by 1 cent per share.
Revenue slipped 1 percent to $623 million, missing analysts' expectations of $635 million.
Worldwide sales at restaurants open at least 13 months were down 0.7 percent, with a 1.5 percent drop in the United States and Canada.
"We believe that same-store sales improvement is not likely in the near term, and believe there is little upside to EPS," Janney Capital Markets analyst Mark Kalinowski wrote in a research note.
McDonald's global same-restaurant sales were up 4.8 percent for the June quarter, while Wendy's reported a 1.7 percent fall in systemwide sales at established North America restaurants.
Assuming no change in cost structure, Burger King said a 1 percentage point increase in worldwide comparable sales would increase its annual earnings per share by 6 cents.
It expects to add between 225 and 275 new stores in fiscal 2011, with more than 90 percent of the net restaurant growth to take place outside of the United States and Canada.
Burger King said that within the next three to five years, it expects to refranchise up to half its current company-owned restaurants, a move that Baird analyst David Tarantino said should reduce volatility in its operating results.
The company said it expected commodity costs in the United States to be flat in fiscal 2011, although prices of wheat and beef were uncertain.
Until it refinances its debt, Burger King must make quarterly payments of $21.9 million. In light of the maturity schedule, the company said it was evaluating refinancing options.
Shares of Burger King were up 1 percent at $16.79 in morning trading. At Monday's close, they had fallen 13 percent from the start of June.
(Additional reporting by Phil Wahba and Lisa Baertlein; editing by John Wallace, Dave Zimmerman and Lisa Von Ahn)
