UPDATE 2-CKE investor Ramius urges it to cut costs, spending

Tue Jun 17, 2008 10:13pm EDT
 
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(Adds CKE response)

LOS ANGELES, June 17 (Reuters) - CKE Restaurants Inc (CKR.N) investor Ramius LLC said on Tuesday it had urged the parent of Carl's Jr and other fast-food chains to significantly cut operating costs and to curb its capital spending plan.

"We are writing to you today to express our disappointment in the clear lack of urgency on the part of the Board and senior management in addressing the Company's suboptimal performance," representatives from the hedge fund said in a letter sent to journalists on Tuesday.

Ramius said it owns 1.9 million shares, or about 3.6 percent of CKE, which also operates the Hardee's and Green Burrito restaurant chains.

The company, which is stepping up franchise development in international markets, in March posted a bigger-than-expected drop in fiscal fourth-quarter net income due to a bad bet on interest rates.

Late last month, CKE said sales at established restaurants rose 1.8 percent during the four weeks ended May 19.

The company said on May 28 that same-store sales at Carl's Jr outlets rose 4.2 percent in the period, while Hardee's same-store sales fell 1 percent.

In a letter addressed to Ramius, which was made public late on Tuesday, CKE said it had previously informed Ramius it was constrained it its dialogue on the issues raised until its shareholders' meeting on June 19th and its earnings conference call on June 26th.

(Reporting by Lisa Baertlein, additional reporting by Yinka Adegoke in New York, editing by Phil Berlowitz and Jacqueline Wong)

 

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