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Chipotle’s Earnings Miss the Mark as Comps Drop 22%

Tuesday, October 25, 2016 13:57
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Chipotle logoBurrito chain Chipotle Mexican Grill, Inc. (NYSE:CMG) posted disappointing third quarter earnings results this evening, as profit, revenue, and comps all missed expectations.

The Denver-based company reported Q3 EPS of just $0.56, far below Wall Street’s consensus estimate of $1.06. Revenue fell 14.8% from last year to $1.04 billion, also missing analysts’ view of $1.09 billion.

Comparable restaurant sales plunged 21.9% from last year, hurt mostly by lower volume, but also impacted by smaller average check sizes. Comparable restaurant sales, also known as comps, are perhaps the most important measure of a food chain’s performance, since they only compare sales of restaurants open at least one year.

Restaurant operating margin was 14.1% in the latest period, cut in half from Q3 of 2015.

Looking ahead, CMG forecast Q4 comps to fall in the low single-digits, which would be much worse than the -0.5% expected. For full-year 2017, Chipotle sees EPS of $10.00, which would actually beat Wall Street’s $9.94 estimate, however.

Chipotle’s board of directors also approved a $100 million share buyback plan in addition to its prior $69.2 million available on its existing plan.

The company commented via press release:

“We continued to make steady progress in our sales recovery during the third quarter. We are earning back our customers’ trust, and our research demonstrates that people are feeling better about our brand, and the quality of our food. While this year has been a year of reinvestment, we are now focused on continuing to further recover sales and improve our economic model to create long-term shareholder value. Today we will share our financial and operational goals for 2017, and our plan to achieve them,” said Steve Ells, founder, chairman and co-CEO of Chipotle.

Chipotle shares fell $9.50 (-2.34%) to $396.17 in after-hours trading Tuesday. Prior to today’s report, CMG had fallen more than 14% year-to-date.


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