But the stock dropped amid concerns about same-store sales growth.
Despite a steep increase in chicken wing costs, Buffalo Wild Wings Inc. on Tuesday posted a 23 percent increase in quarterly profits over a year ago, besting Wall Street's earnings expectations.
The Golden Valley-based restaurant company announced first-quarter earnings of $18.2 million, or 98 cents per share, 3 cents higher than the consensus forecast of stock analysts polled by Thomson Reuters.
Buffalo Wild Wings' first-quarter revenue grew 38 percent to $251.1 million, roughly in line with analysts' expectations. Same-store sales -- a key financial gauge that takes into account newly opened stores -- rose 9.2 percent at company-owned stores.
Same-store sales are up 6.7 percent year-over-year so far during the second quarter, the company said. Chief Executive Sally Smith told analysts in a conference call she believes the company will meet its goal of 20 percent earnings growth this year, even with higher wing costs.
Still, investors reacted by driving down Buffalo Wild Wings' stock almost 6 percent; it closed at $78.17, down $4.87.
Wedbush Securities analyst Nick Setyan called the 9.2 percent same-store sales growth, which would be strong for most restaurant companies, "disappointing" for the fast-growing Wild Wings. And that growth rate is decelerating so far this quarter, he noted.
Buffalo Wild Wings needs particularly strong sales to offset a spike in its costs for chicken wings, which were up 57 percent on average over the same quarter a year ago. The wing cost outlook for the current quarter isn't much better.
Larry Miller, a stock analyst at RBC Capital Markets, said he found it "a bit surprising" that Buffalo Wild Wings' stock sold off as much as it did Tuesday. The company's top-line sales growth is in a range that should allow it to meet profit goals, even with higher wing costs, he said.
Mike Hughlett • 612-673-7003