Buffalo Wild Wings Inc. posted a bang-up quarter Tuesday, with falling wholesale chicken wing prices anchoring a 25 percent increase in profits that handily beat Wall Street’s expectations.
Golden Valley-based Buffalo Wild Wings, one of the nation’s hottest restaurant concepts, continued to expand while posting solid profits. The company, known for its beer, wings and sports motif, recently opened its 1,000th restaurant.
“Bottom line, I thought the fourth quarter was a great quarter in the face of a very tough retail environment and bad weather,” said Will Slabaugh, a stock analyst for Stephens Inc.
Wild Wings recorded fourth-quarter earnings of $20.8 million, or $1.10 per share, compared with $16.7 million, or 89 cents per share, a year ago.
Analysts polled by Thomson Reuters were on average expecting profits of $1.06 per share for 2013’s fourth quarter, and sales of $346.9 million. Wild Wings fell short of sales expectations, posting revenue of $341.5 million, up 12.4 percent over a year earlier.
“The fourth quarter completed a great year for Buffalo Wild Wings,” CEO Sally Smith told analysts in a conference call.
For the quarter, Wild Wings’ same-store store sales — which adjust for recently opened or closed restaurants — rose 5.2 percent at company-owned outlets during the quarter. Same-store sales at franchised restaurants were up 3.1 percent over a year ago.
And 2014 is off to a solid start, with same-store sales at company-owned restaurants up 4.8 percent in the first five weeks over the same time a year ago.
The company’s fourth-quarter bottom line was buoyed by falling wholesale wing prices. Wild Wings’ wing costs were $1.64 per pound during the fourth quarter, down 21 percent from $2.07 per pound a year ago.
In December, Wild Wings opened its first outlet in Mexico, part of an international expansion that also includes Canada and will eventually lead to restaurants in the Philippines. “Sales were robust [in Mexico], which gives us confidence the brand travels well,” Smith told analysts.
In 2014, Wild Wings expects to open at least two PizzaRev outlets in the Minneapolis area. PizzaRev is a Southern California fast-casual pizza concept that Wild Wings invested in last year with the intent of expanding nationwide.
Smith said Wild Wings might add one or two more new restaurant concepts by the end of 2014. “There’s a lot of interesting things out there,” she told analysts.
Smith also said that a recently announced partnership with PepsiCo has yielded a new Ruffles potato chip product flavored like Buffalo Wild Wings’ chicken wings. Frito-Lay, maker of Ruffles, is an arm of PepsiCo.
Wild Wings also said that in 2014, it expects to meet its customary goal of 20 percent net annual earnings growth. Price increases are expected to be implemented gradually, beginning in the first quarter.
Buffalo Wild Wings’ earnings were released after the stock market closed. Its shares ended at $143.99 in after-hours trading, up $7.95, or 5.8 percent, from Monday’s closing price.