EAT Brinker International Inc

Brinker International Inc. (EAT) swung to a fiscal second-quarter profit that topped Wall Street estimates as its flagship Chili's Grill & Bar posted a softer sales decline than expected.

Shares recently gained 8.2% premarket to $16.56.

The casual-dining restaurant operator, in reversing a prior-year loss caused by restaurant-closing charges and a loss from selling 80% of Romano's Macaroni Grill, said same-store sales decline 3.1% across its three brands, including a 3.2% drop at Chili's. Jefferies & Co. analyst Jeffrey Farmer said most investors expected the decline to be more than 4% on a weak consumer appetite and prevalent discounting.

"That is good news when the core concept improves," Farmer said. "I don't think anyone saw that coming."

The casual-dining segment focused on discounts and promotions last year to bring in customers, though deep discounting that hurt margins appears to have eased. Rival Darden Restaurants Inc. (DRI) raised hopes that sector sales trends were improving last month.

Brinker chain Chili's is trying to set itself apart from its chief bar-and-grill rivals like DineEquity Inc.'s (DIN) Applebee's and privately held T.G.I. Friday's by upgrading its menu with items like tacos as well as new recipes of its signature baby-back ribs, hoping that it can wean diners off of some margin-eating discounts.

For the quarter ended Dec. 23, Brinker reported a profit of $18.3 million, or 18 cents a share, compared with a prior-year loss of $21.8 million, or 21 cents a share. Excluding items, such as the restaurant closing-related costs, earnings from continuing operations rose to 29 cents a share from 27 cents a share.

Revenue decreased to $781.9 million from $949.4 million amid restaurant closures and the sale of the Romano's Macaroni Grill locations.

Analysts polled by Thomson Reuters forecast earnings of 22 cents a share on revenue of $774 million.

Cost of sales as a percent of revenue rose to 28.9% from 28.2% on promotions and higher commodity prices, mostly for chicken and dairy.

-By Paul Ziobro, Dow Jones Newswires; 212-416-2194; paul.ziobro@dowjones.com

(Tess Stynes contributed to this article.)

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