- By Bob B. Brown on Flickr
Buffalo Wild Wings sales and earnings fell short of expectations.
The stock is down 16% in Thursday trading.
During the three months ending in September, the chicken wing chain reported $455.5 million in sales, which was less than the $466.8 million expected by analysts.
Same-store sales at company-owned and franchisee-owned restaurants climbed by just 3.9% and 1.2%, respectively. Both figures were lighter than expected.
Management cited “a shift in the sports calendar resulting in one less week of football and fewer pay-per-view events than last year” as sources of weakness.
Earnings fell to $1.00 per share during the quarter from $1.14 in the same period last year. Analysts were looking for $1.29.
“In anticipation of our purchase of the 41 franchised locations, we previously revised our 2015 net earnings growth goal to 13% to account for the incremental expense and transition costs we expected to incur in the third and fourth quarters,” CEO Sally Smith said. “Based on our year-to-date results and updated outlook for the fourth quarter, we are now anticipating single-digit net earnings growth for the year.”
Nevertheless, management remains confident in its brand and the experience it offers to its customers.
“We’re looking forward to 2016 and plan to open 50 company-owned Buffalo Wild Wings,” Smith said. “Buffalo Wild Wings franchisees in the United States anticipate opening 30 restaurants and international franchisees should open approximately 15 locations. R Taco and PizzaRev will continue their growth plans through both company-owned and franchise development next year. As a result of this unit expansion combined with our ongoing sales-driving and operational initiatives, we believe net earnings growth in 2016 should exceed 20%.”
“Initial ’16 guidance suggests a year of above-average growth, but investors’ trust in management’s projections now must be regained,” Oppenheimer’s Brian Bittner said. “Two biggest risks to ’16 are: 1) if the recent blip in traffic stays negative (management models positive traffic), and 2) wing prices move higher despite most poultry items deflating.”