UPDATE 3-Chili's sales send Brinker profits, shares up

(Adds details on Macaroni Grill sale, analyst and company comment, byline)

By Lisa Baertlein

LOS ANGELES Aug 5 (Reuters) - Brinker International Inc (EAT.N) on Tuesday reported a quarterly profit that topped Wall Street estimates, helped by higher sales at its established Chili's Grill & Bar restaurants, and shares rose more than 6 percent.

The rise in Chili's same-store sales was fueled by a 4 percent price increase.

"Chili's is what drives this business. It's all about Chili's," said Stifel Nicolaus restaurant analyst Steve West, who has a "sell" rating on Brinker shares.

"I think the consumer is still weak," said West, adding that Brinker and other restaurant operators were grappling with high costs.

Dallas-based Brinker also said it is in talks with a "qualified buyer" that wants a majority stake in its Romano's Macaroni Grill chain. Under the deal, Brinker would retain minority control of the Italian-themed restaurants and lease certain owned properties to the buyer.

Financing for the deal is not locked in, but the buyer has commitments, Brinker executives said.

If it closes, the deal would force the company to again reclassify results from Macaroni Grill and thereby force analysts to also rework their financial models.

"There is a lack of clarity going forward," West said.

PROFIT DECLINES

On a net basis Brinker's fiscal fourth-quarter profit fell to $42.6 million, or 41 cents per share, in the fiscal fourth quarter ended June 25, from $83.6 million, or 71 cents per share, a year earlier.

Including special items and results from Macaroni Grill, which were reclassified into continued operations during the fourth quarter due to the new sale talks, the company earned 50 cents per share. Analysts on average were expecting 42 cents per share, according to Reuters Estimates.

During the first quarter of fiscal 2008, Brinker announced plans to sell Macaroni Grill and began reporting Macaroni Grill results to discontinued operations.

Quarterly revenue fell to $1.07 billion from $1.14 billion a year earlier, hurt by sales of 171 restaurants to franchisees and 44 restaurant closures.

Systemwide sales at its restaurants open at least 18 months, known as comparable restaurant sales, increased 1 percent, driven by a 3.4 percent gain at Chili's restaurants.

UBS Investment Research analyst David Palmer said in a client note that same-store sales growth topped his forecasts for the quarter.

For fiscal 2009 the company said it expects earnings per share growth of 8 percent to 10 percent, revenue growth of 2.5 percent to 3.5 percent, and comparable restaurant sales growth of 1.5 percent to 2.5 percent.

Brinker shares were up $1.04 to $19.17 in afternoon trade on the New York Stock Exchange (Additional reporting by Martinne Geller; Editing by John Wallace, Dave Zimmerman, Leslie Gevirtz)