Buffalo Wild Wings Inc. on Tuesday posted a 22 percent increase in quarterly profits over a year ago, buoyed by a solid increase in sales, but missed Wall Street estimates as high chicken wing costs continued to eat at the bottom line.
Buffalo Wild Wings profits jump 22 percent, but stock takes hit
The chicken chain's quarterly earnings rose 22 percent but fell short of Wall Street's expectations.
March 21, 2013 at 8:07PM
Golden Valley-based Buffalo Wild Wings, known for its wings, beer and sports motif, recorded fourth-quarter earnings of $16.7 million, or 89 cents per share, up from $13.6 million or 74 cents from the same period in 2011.
Stock analysts polled by Thomson Reuters were on average expecting earnings of 96 cents per share.
Buffalo Wild Wings' fourth-quarter revenue hit $303.8 million, up 38 percent from a year earlier and above analysts' estimates of $292.4 million. The boost came from strong sales growth at existing restaurants, as well the addition of 62 new company outlets and incremental revenue from a "14th week" for financial reporting purposes.
Buffalo Wild Wings' annual revenue exceeded $1 billion for the first time last year. "We are very pleased with our results, and we continue to break sales records," CEO Sally Smith told analysts in a conference call.
During 2012, Buffalo Wild Wings had to cope with record high wholesale wing prices — after record lows just a year earlier.
During the fourth quarter, wings cost $2.07 per pound on average, up from $1.42 a year ago. Buffalo Wild Wings has been getting fewer wings per pound as producers breed bigger birds.
"We're not worried at all about [the company's] top line, it's just wing prices — they're killing them," said Mark Smith, a stock analyst at Feltl & Co. who has a "sell" rating on Wild Wings' stock.
The majority of analysts have a "buy" or "outperform" rating on the stock.
Wild Wings earnings were announced after the stock market closed Tuesday. In mid-morning trading Wednesday, the stock was at $77.61 down $3.46, or 4.3 percent.
To cope with high wholesale wing prices, Wild Wings has passed price increases to consumers — more than 4 percent. Smith told analysts the company has seen no backlash.
Wild Wings posted strong fourth-quarter growth in same-store sales, a key gauge that takes into account newly opened and closed outlets. But so far in 2013, same-store sales are "challenging to interpret," Wild Wings executives say.
Through 2013's first six weeks, same-store sales at company-owned restaurants and franchised locations were down 2.8 percent and 1.7 percent respectively. But 2012 effectively had a 53rd week for financial reporting (hence the fourth quarter's 14th week), misaligning year-over-year dates for college football bowls and the NFL's Super Bowl.
Adjusting for that, Wild Wings' same-store sales during 2013's first six weeks rose 2.6 percent and 1.6 percent respectively at company-owned stores and franchised locations, still well below the fourth quarter's growth rate.
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