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Red Robin (RRGB) Q4 Earnings Miss Estimates, Stock Down
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Red Robin Gourmet Burgers, Inc. (RRGB - Free Report) reported dismal fourth-quarter fiscal 2021 results, with earnings and revenues missing the Zacks Consensus Estimate. However, the top and the bottom line increased on a year-over-year basis.
Following the results, the company’s shares fell 4.8% during the after-hours trading session on Mar 10. Negative investor sentiments were witnessed as management stated issues related to margin pressures on account of commodity and restaurant labor cost inflation.
Earnings & Revenue Discussion
During the fourth quarter, Red Robin reported an adjusted loss per share of $1.03, wider than the Zacks Consensus Estimate of a loss of 57 cents. In the year-ago quarter, the company had reported an adjusted loss of $1.79.
Red Robin Gourmet Burgers, Inc. Price, Consensus and EPS Surprise
Quarterly revenues of $283.4 million lagged the consensus mark of $292 million. However, the top line increased 40.9% year over year. The upside was primarily driven by favorable guest count, increased menu mix and pricing as well as discounted offerings.
During the quarter under review, comparable restaurant revenues surged 40.1% year over year. The upside was primarily driven by a 26.6% rise in guest count and a 13.5% increase in average guest checks. The upside in average guest check can be attributed to a 4.2% rise in pricing, a 7% rise in menu mix and a 2.3% decline in discounts. Menu mix, during the fiscal fourth quarter, gained from higher sales of beverages and limited-time menu offerings.
Operating Results
The restaurant-level operating profit margin was 13% in the fiscal fourth quarter compared with 6.2% reported in the prior-year quarter.
During the fiscal fourth quarter, restaurant labor costs (as a percentage of restaurant revenues) declined 350 bps year over year to 36%. The downside was primarily due to sales leverage. However, this was partially offset by a rise in restaurant labor, cost inflation, staffing and training costs. Additionally, Red Robin incurred $3.2 million transitory labor and other operating costs in the fiscal fourth quarter due to staffing and supply chain challenges.
Meanwhile, other operating costs declined 170 bps year over year to 18.7%. During the quarter under review, the cost of sales increased 220 bps year over year to 24.3%. Occupancy costs fell 380 bps year over year to 8%. The downside was primarily due to savings from permanently-closed restaurants, restructuring of lease payments and sales leverage.
Adjusted earnings before interest expenses, income taxes, depreciation and amortization during the fiscal fourth quarter amounted to $8.9 million against a loss of $6.4 million reported in the year-ago quarter.
Other Financial Information
As of Dec 26, 2021, Red Robin had cash and cash equivalents of $22.8 million compared with $16.1 million as of Dec 27, 2020. Long-term debt as of Dec 26, 2021, stood at $167.3 million compared with $161 million as of Dec 27, 2020.
Inventories during the quarter were $25.2 million compared with $23.8 million as of Dec 27, 2020.
Other Updates
During the quarter, the company soft-launched two fresh mobile apps — iOS and Android, a new website ordering experience and a new loyalty platform. Going forward, the company anticipates the digital ecosystem to drive traffic and average guest checks as well as improve order completion.
2021 Highlights
Total revenues in fiscal 2021 amounted to $ 1,162.1 million compared with $868.7 million in fiscal 2020.
Adjusted EBITDA in fiscal 2021 came in at $63.5 million against ($33.1) million reported in fiscal 2020.
In fiscal 2021, adjusted loss per share came in at $2.43 compared with $11.33 reported in the previous year.
Guidance
Red Robin provided limited guidance. For fiscal 2022, the company continues to expect capital expenditures in the range of $40 million to $50 million. This includes investments related to restaurants, infrastructure and systems capital maintenance, digital guest, operational technology solutions and off-premises execution enhancements.
The company announced Donatos expansion to approximately 50 restaurants in 2022.
For fiscal 2022, the company expects selling, general and administrative costs in the range of $145 and $155 million. Adjusted EBITDA is anticipated between $80 million and $90 million. In 2022, the company anticipates commodity and restaurant labor cost inflation to be in the mid-to-high single digit.
Zacks Rank & Key Picks
Red Robin currently has a Zacks Rank #5 (Strong Sell).
Designer Brands sports a Zacks Rank #1. The company has a trailing four-quarter earnings surprise of 116%, on average. Shares of the company have increased 4.1% in the past six months.
The Zacks Consensus Estimate for Designer Brands’ 2022 sales and earnings per share (EPS) suggests growth of 44% and 143.3%, respectively, from the year-ago period’s levels.
Arcos Dorados carries a Zacks Rank #2 (Buy). ARCO has a long-term earnings growth of 24.7%. Shares of the company have increased 45.4% in the past year.
The Zacks Consensus Estimate for Arcos Dorados’ 2022 sales and EPS suggests growth of 9.2% and 148.9%, respectively, from the year-ago period’s levels.
Tapestry carries a Zacks Rank #2. The company has a trailing four-quarter earnings surprise of 28.2%, on average. Shares of the company have declined 20.2% in the past year.
The Zacks Consensus Estimate for Tapestry’s 2022 sales and EPS suggests growth of 17.5% and 22.9%, respectively, from the year-ago period’s levels.
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Red Robin (RRGB) Q4 Earnings Miss Estimates, Stock Down
Red Robin Gourmet Burgers, Inc. (RRGB - Free Report) reported dismal fourth-quarter fiscal 2021 results, with earnings and revenues missing the Zacks Consensus Estimate. However, the top and the bottom line increased on a year-over-year basis.
Following the results, the company’s shares fell 4.8% during the after-hours trading session on Mar 10. Negative investor sentiments were witnessed as management stated issues related to margin pressures on account of commodity and restaurant labor cost inflation.
Earnings & Revenue Discussion
During the fourth quarter, Red Robin reported an adjusted loss per share of $1.03, wider than the Zacks Consensus Estimate of a loss of 57 cents. In the year-ago quarter, the company had reported an adjusted loss of $1.79.
Red Robin Gourmet Burgers, Inc. Price, Consensus and EPS Surprise
Red Robin Gourmet Burgers, Inc. price-consensus-eps-surprise-chart | Red Robin Gourmet Burgers, Inc. Quote
Quarterly revenues of $283.4 million lagged the consensus mark of $292 million. However, the top line increased 40.9% year over year. The upside was primarily driven by favorable guest count, increased menu mix and pricing as well as discounted offerings.
During the quarter under review, comparable restaurant revenues surged 40.1% year over year. The upside was primarily driven by a 26.6% rise in guest count and a 13.5% increase in average guest checks. The upside in average guest check can be attributed to a 4.2% rise in pricing, a 7% rise in menu mix and a 2.3% decline in discounts. Menu mix, during the fiscal fourth quarter, gained from higher sales of beverages and limited-time menu offerings.
Operating Results
The restaurant-level operating profit margin was 13% in the fiscal fourth quarter compared with 6.2% reported in the prior-year quarter.
During the fiscal fourth quarter, restaurant labor costs (as a percentage of restaurant revenues) declined 350 bps year over year to 36%. The downside was primarily due to sales leverage. However, this was partially offset by a rise in restaurant labor, cost inflation, staffing and training costs. Additionally, Red Robin incurred $3.2 million transitory labor and other operating costs in the fiscal fourth quarter due to staffing and supply chain challenges.
Meanwhile, other operating costs declined 170 bps year over year to 18.7%. During the quarter under review, the cost of sales increased 220 bps year over year to 24.3%. Occupancy costs fell 380 bps year over year to 8%. The downside was primarily due to savings from permanently-closed restaurants, restructuring of lease payments and sales leverage.
Adjusted earnings before interest expenses, income taxes, depreciation and amortization during the fiscal fourth quarter amounted to $8.9 million against a loss of $6.4 million reported in the year-ago quarter.
Other Financial Information
As of Dec 26, 2021, Red Robin had cash and cash equivalents of $22.8 million compared with $16.1 million as of Dec 27, 2020. Long-term debt as of Dec 26, 2021, stood at $167.3 million compared with $161 million as of Dec 27, 2020.
Inventories during the quarter were $25.2 million compared with $23.8 million as of Dec 27, 2020.
Other Updates
During the quarter, the company soft-launched two fresh mobile apps — iOS and Android, a new website ordering experience and a new loyalty platform. Going forward, the company anticipates the digital ecosystem to drive traffic and average guest checks as well as improve order completion.
2021 Highlights
Total revenues in fiscal 2021 amounted to $ 1,162.1 million compared with $868.7 million in fiscal 2020.
Adjusted EBITDA in fiscal 2021 came in at $63.5 million against ($33.1) million reported in fiscal 2020.
In fiscal 2021, adjusted loss per share came in at $2.43 compared with $11.33 reported in the previous year.
Guidance
Red Robin provided limited guidance. For fiscal 2022, the company continues to expect capital expenditures in the range of $40 million to $50 million. This includes investments related to restaurants, infrastructure and systems capital maintenance, digital guest, operational technology solutions and off-premises execution enhancements.
The company announced Donatos expansion to approximately 50 restaurants in 2022.
For fiscal 2022, the company expects selling, general and administrative costs in the range of $145 and $155 million. Adjusted EBITDA is anticipated between $80 million and $90 million. In 2022, the company anticipates commodity and restaurant labor cost inflation to be in the mid-to-high single digit.
Zacks Rank & Key Picks
Red Robin currently has a Zacks Rank #5 (Strong Sell).
Some better-ranked stocks in the Zacks Retail-Wholesale sector include Designer Brands Inc. (DBI - Free Report) , Arcos Dorados Holdings Inc. (ARCO - Free Report) and Tapestry, Inc. (TPR - Free Report) . You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Designer Brands sports a Zacks Rank #1. The company has a trailing four-quarter earnings surprise of 116%, on average. Shares of the company have increased 4.1% in the past six months.
The Zacks Consensus Estimate for Designer Brands’ 2022 sales and earnings per share (EPS) suggests growth of 44% and 143.3%, respectively, from the year-ago period’s levels.
Arcos Dorados carries a Zacks Rank #2 (Buy). ARCO has a long-term earnings growth of 24.7%. Shares of the company have increased 45.4% in the past year.
The Zacks Consensus Estimate for Arcos Dorados’ 2022 sales and EPS suggests growth of 9.2% and 148.9%, respectively, from the year-ago period’s levels.
Tapestry carries a Zacks Rank #2. The company has a trailing four-quarter earnings surprise of 28.2%, on average. Shares of the company have declined 20.2% in the past year.
The Zacks Consensus Estimate for Tapestry’s 2022 sales and EPS suggests growth of 17.5% and 22.9%, respectively, from the year-ago period’s levels.