We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Buffalo Wild Wings Inc.’s second-quarter 2016 earnings beat the Zacks Consensus Estimate, while sales missed the same due to weak comps.
Highlights
Adjusted earnings of $1.27 per share grew 13.1% year over year due to better food/labor cost leverage and lower share count due to higher buybacks. Earnings also inched past the Zacks Consensus Estimate of $1.26 by 0.79%.
Total revenue increased approximately 15% from the year-ago quarter to $490.2 million driven by a year-over-year improvement in unit development and franchise acquisitions. However, revenues missed the consensus mark of $502 million by approximately 2.35%.
During the quarter, company-owned restaurant sales jumped 16.1% year over year to $466.6 million. The upside was driven by the opening of 89 additional Buffalo Wild Wings outlets.
Company-owned comps dipped 2.1% and compared unfavorably to comps decline of 1.7% in the previous quarter. Last year, company-owned comps grew 4.2%. Fewer playoff games between Chicago Blackhawks and the Chicago Bulls teams – most of whom are Buffalo Wild customers – resulted in lower comps during the period.
Franchise royalties and fees decreased 3.8% year over year to $23.6 million due to a reduction in franchised units by seven in the quarter. Comps declined 2.6% as against a comps decrease of 2.4% in the previous quarter. The company had registered a comps growth of 6% in the year-ago quarter.
Buffalo Wild Wings' cost of sales, as a percentage of revenues, expanded 40 basis points (bps) to 29.7% due to a 3% year-over-year increase in chicken wing costs. The company’s cost of labor, as a percentage of revenues, decreased 20 bps to 32%.
Restaurant operating expenses, as a percentage of restaurant sales, were 14.6%. This reflects a 50 bps increase from the prior-year quarter due to higher repair and maintenance costs.
During the quarter, the company opened five new company-owned restaurants and one R Taco outlet.
The company reiterated its 2016 earnings outlook and expects earnings per share in the range of $5.65 to $5.85. The company expects higher deflationary food cost and modest traffic in the upcoming quarters. The estimated earnings range is lower than earnings of $6.10 per share reported a year ago. The earnings guidance, however, is in line with the Zacks Consensus Estimate of $5.73 per share as well as general market expectations.
During 2016, the company expects to open approximately 40 company-owned Buffalo Wild Wings restaurants, about 30–35 franchised Buffalo Wild Wings locations in the U.S., nearly 12–15 franchised Buffalo Wild Wing locations internationally, six company-owned and four franchised R Taco restaurants. The company expects to incur capital expenditure of approximately $170 million during the year.
Buffalo Wild Wings also expects comps to rise in 2016, while traffic is likely to be modestly positive. The company anticipates deflationary food cost in 2016, excluding traditional chicken wings.
A Peek into the Third Quarter
Menu price increases and adjustments made in the last 12 months are expected to be 3.6% in the third quarter. In the quarter, the company expects to open eight company-owned Buffalo Wild Wings restaurants and one company-owned R Taco compared with 17 new company-owned Buffalo Wild Wings locations opened a year ago. Buffalo Wild Wings franchisees in the United States are expected to open nine restaurants during the third quarter. International B-Dubs franchisees are expected to open three restaurants in the quarter.
Cost for traditional chicken wings for the first two months of third quarter is expected to average $1.69 per pound. The average cost in third-quarter 2015 was $1.79 per pound. Labor, as a percentage of restaurant sales in the third quarter, is expected to be approximately 32%. General and Administrative expenses are expected to be approximately $32.5 million.
The company presently has a Zacks Rank #3 (Hold).
Stocks to Consider
Some better-ranked stocks in the same industry include Chuy’s Holdings, Inc. (CHUY - Free Report) , Del Taco Restaurants Inc. and Dominno’s Pizza Inc. (DPZ - Free Report) . All these stocks hold a Zacks Rank #2 (Buy).
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
Buffalo Wild Wings (BWLD) Tops Q2 Earnings, Lags Sales
Buffalo Wild Wings Inc.’s second-quarter 2016 earnings beat the Zacks Consensus Estimate, while sales missed the same due to weak comps.
Highlights
Adjusted earnings of $1.27 per share grew 13.1% year over year due to better food/labor cost leverage and lower share count due to higher buybacks. Earnings also inched past the Zacks Consensus Estimate of $1.26 by 0.79%.
Total revenue increased approximately 15% from the year-ago quarter to $490.2 million driven by a year-over-year improvement in unit development and franchise acquisitions. However, revenues missed the consensus mark of $502 million by approximately 2.35%.
Performance in Details
During the quarter, company-owned restaurant sales jumped 16.1% year over year to $466.6 million. The upside was driven by the opening of 89 additional Buffalo Wild Wings outlets.
Company-owned comps dipped 2.1% and compared unfavorably to comps decline of 1.7% in the previous quarter. Last year, company-owned comps grew 4.2%. Fewer playoff games between Chicago Blackhawks and the Chicago Bulls teams – most of whom are Buffalo Wild customers – resulted in lower comps during the period.
Franchise royalties and fees decreased 3.8% year over year to $23.6 million due to a reduction in franchised units by seven in the quarter. Comps declined 2.6% as against a comps decrease of 2.4% in the previous quarter. The company had registered a comps growth of 6% in the year-ago quarter.
Buffalo Wild Wings' cost of sales, as a percentage of revenues, expanded 40 basis points (bps) to 29.7% due to a 3% year-over-year increase in chicken wing costs. The company’s cost of labor, as a percentage of revenues, decreased 20 bps to 32%.
Restaurant operating expenses, as a percentage of restaurant sales, were 14.6%. This reflects a 50 bps increase from the prior-year quarter due to higher repair and maintenance costs.
During the quarter, the company opened five new company-owned restaurants and one R Taco outlet.
BUFFALO WLD WNG Price, Consensus and EPS Surprise
BUFFALO WLD WNG Price, Consensus and EPS Surprise | BUFFALO WLD WNG Quote
2016 View Maintained
The company reiterated its 2016 earnings outlook and expects earnings per share in the range of $5.65 to $5.85. The company expects higher deflationary food cost and modest traffic in the upcoming quarters. The estimated earnings range is lower than earnings of $6.10 per share reported a year ago. The earnings guidance, however, is in line with the Zacks Consensus Estimate of $5.73 per share as well as general market expectations.
During 2016, the company expects to open approximately 40 company-owned Buffalo Wild Wings restaurants, about 30–35 franchised Buffalo Wild Wings locations in the U.S., nearly 12–15 franchised Buffalo Wild Wing locations internationally, six company-owned and four franchised R Taco restaurants. The company expects to incur capital expenditure of approximately $170 million during the year.
Buffalo Wild Wings also expects comps to rise in 2016, while traffic is likely to be modestly positive. The company anticipates deflationary food cost in 2016, excluding traditional chicken wings.
A Peek into the Third Quarter
Menu price increases and adjustments made in the last 12 months are expected to be 3.6% in the third quarter. In the quarter, the company expects to open eight company-owned Buffalo Wild Wings restaurants and one company-owned R Taco compared with 17 new company-owned Buffalo Wild Wings locations opened a year ago. Buffalo Wild Wings franchisees in the United States are expected to open nine restaurants during the third quarter. International B-Dubs franchisees are expected to open three restaurants in the quarter.
Cost for traditional chicken wings for the first two months of third quarter is expected to average $1.69 per pound. The average cost in third-quarter 2015 was $1.79 per pound. Labor, as a percentage of restaurant sales in the third quarter, is expected to be approximately 32%. General and Administrative expenses are expected to be approximately $32.5 million.
The company presently has a Zacks Rank #3 (Hold).
Stocks to Consider
Some better-ranked stocks in the same industry include Chuy’s Holdings, Inc. (CHUY - Free Report) , Del Taco Restaurants Inc. and Dominno’s Pizza Inc. (DPZ - Free Report) . All these stocks hold a Zacks Rank #2 (Buy).
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>