Release Date: April 08, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Kura Sushi USA Inc (KRUS, Financial) opened 11 new units to date with six more under construction, indicating strong expansion efforts.
- The company has a robust IP collaboration pipeline for fiscal '26, with seven to eight planned collaborations, which is expected to drive sales.
- Kura Sushi USA Inc (KRUS) has no debt and holds $85.2 million in cash and cash equivalents, showcasing a strong financial position.
- The reservation system, currently being tested, has been well-received and is expected to drive traffic once fully rolled out.
- The company is maintaining a 20%+ unit growth rate, with plans to open 14 units in fiscal year 2025, indicating continued expansion.
Negative Points
- Comparable sales growth was negative 5.3%, with a significant decline in traffic of 8.5%, indicating challenges in maintaining customer visits.
- Labor costs increased by 180 basis points due to wage inflation and sales deleverage, impacting profit margins.
- Restaurant-level operating profit margin decreased to 17.3% from 19.6% in the prior year, reflecting operational challenges.
- The company faced a net loss of $3.8 million, or negative $0.31 per share, compared to a net loss of $1 million in the prior year quarter.
- Uncertainty around tariffs and their potential impact on consumer confidence and supply chain costs poses a risk to future performance.
Q & A Highlights
Q: Can you discuss the impact of weather on your quarterly performance and any improvements in trends?
A: (Hajime Uba, CEO) The inclement weather, including wildfires and flooding, significantly impacted our performance in January and February. However, starting in March, our performance has been smooth, although there is some uncertainty due to recent tariff announcements.
Q: Are you still confident in achieving a 20% restaurant-level operating profit margin for fiscal 2025?
A: (Hajime Uba, CEO) We were confident in maintaining a 20% margin through March, but the uncertainty with tariffs has reduced our visibility. Despite higher-than-expected labor inflation, we have unique levers like tech initiatives to help us achieve our goals.
Q: How do you view the broader consumer environment, and are there any concerns about a slowdown in consumer spending?
A: (Hajime Uba, CEO) Beyond weather impacts, we were lapping a successful IP campaign, making Q2 a tough comparison. We don't see a slowdown in consumer spending, but recent tariff announcements have increased uncertainty, affecting consumer confidence.
Q: What is the impact of tariffs on your supply chain and costs?
A: (Jeffrey Uttz, CFO) We are still assessing the impact of tariffs. Some suppliers have indicated a willingness to share the burden. We source from countries like Japan and Vietnam, which are open to negotiations, potentially mitigating the impact.
Q: Can you provide more details on your IP collaborations planned for the second half of the year?
A: (Jeffrey Uttz, CFO) We have several exciting IP collaborations lined up, including Demon Slayer, One Piece, Peanuts, and a new partnership with Nintendo featuring Kirby. We aim to have seven or eight collaborations in fiscal 2026, a record for us.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
