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Zoe's Kitchen, Inc. reported mixed second-quarter 2016 financial results, wherein earnings were in line with the Zacks Consensus Estimate while revenues lagged the same.
Notably, the company’s shares declined nearly 16% in afterhours trading on Aug 22, mirroring investor concerns surrounding the company’s revenue and comps guidance cut for full-year 2016.
Earnings and Revenue Discussion
Zoe's Kitchen’s adjusted earnings of 6 cents per share were in line with the Zacks Consensus Estimate. Notably, the figure increased 20% from the prior-year quarter earnings of 5 cents, on the back of improved revenues and margins.
Revenues of $66.3 million lagged the consensus mark of $67 million by over 1% but improved 21.7% year over year backed by a 4% comps increase.
Behind the Headline Numbers
Comparable restaurant sales increased 4% driven by 0.9% improvement in transactions and product mix along with a 3.1% price hike. However, the figure compared unfavorably with the prior quarter comps growth of 8.1%.
Restaurant contribution margin went up 40 basis points (bps) to 21.7% as commodity costs declined year over year. The improvement was, however, partially offset by an increase in labor and store operating expenses.
2016 Guidance
Zoe's Kitchen slashed its guidance for restaurant sales and comps for full-year 2016. The company trimmed the upper end of its restaurant sales outlook and now expects it to be in the range of $277 million to $280 million (earlier $277–$281 million). Meanwhile, comps are likely to grow in the 4% to 5% band, down from the prior guidance of 4.5%–6%.
Also, the company predicts restaurant contribution margin in the range of 20.5% to 20.8% (earlier 20.5%–21%).
Meanwhile, the company reaffirmed its projection for adjusted general and administrative (G&A) expense margin between 11.5% and 11.7%.
Zacks Rank & Stocks to Consider
Zoe's Kitchen has a Zacks Rank #4 (Sell). Better-ranked stocks in this sector include Papa John's International Inc. (PZZA - Free Report) , Del Taco Restaurants, Inc. and Restaurant Brands International Inc. (QSR - Free Report) . All the three stocks carry a Zacks Rank #2 (Buy).
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Zoe's Kitchen (ZOES) Q2 Earnings Meet, View Cut Hits Stock
Zoe's Kitchen, Inc. reported mixed second-quarter 2016 financial results, wherein earnings were in line with the Zacks Consensus Estimate while revenues lagged the same.
Notably, the company’s shares declined nearly 16% in afterhours trading on Aug 22, mirroring investor concerns surrounding the company’s revenue and comps guidance cut for full-year 2016.
Earnings and Revenue Discussion
Zoe's Kitchen’s adjusted earnings of 6 cents per share were in line with the Zacks Consensus Estimate. Notably, the figure increased 20% from the prior-year quarter earnings of 5 cents, on the back of improved revenues and margins.
ZOES KITCHEN Price, Consensus and EPS Surprise
ZOES KITCHEN Price, Consensus and EPS Surprise | ZOES KITCHEN Quote
Revenues of $66.3 million lagged the consensus mark of $67 million by over 1% but improved 21.7% year over year backed by a 4% comps increase.
Behind the Headline Numbers
Comparable restaurant sales increased 4% driven by 0.9% improvement in transactions and product mix along with a 3.1% price hike. However, the figure compared unfavorably with the prior quarter comps growth of 8.1%.
Restaurant contribution margin went up 40 basis points (bps) to 21.7% as commodity costs declined year over year. The improvement was, however, partially offset by an increase in labor and store operating expenses.
2016 Guidance
Zoe's Kitchen slashed its guidance for restaurant sales and comps for full-year 2016. The company trimmed the upper end of its restaurant sales outlook and now expects it to be in the range of $277 million to $280 million (earlier $277–$281 million). Meanwhile, comps are likely to grow in the 4% to 5% band, down from the prior guidance of 4.5%–6%.
Also, the company predicts restaurant contribution margin in the range of 20.5% to 20.8% (earlier 20.5%–21%).
Meanwhile, the company reaffirmed its projection for adjusted general and administrative (G&A) expense margin between 11.5% and 11.7%.
Zacks Rank & Stocks to Consider
Zoe's Kitchen has a Zacks Rank #4 (Sell). Better-ranked stocks in this sector include Papa John's International Inc. (PZZA - Free Report) , Del Taco Restaurants, Inc. and Restaurant Brands International Inc. (QSR - Free Report) . All the three stocks carry 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 >>