Buffalo Wild Wings Inc. lost some of its zest Tuesday, warning investors of soft sales during April while growth in a key sales gauge didn't live up to past results -- or analyst expectations -- during the company's first quarter.
St. Louis Park-based Buffalo Wild Wings stock, in after-hours trading, reacted by sinking about $10, or 20 percent. After-hours trading is an indicator of where the stock will open the next trading day.
Buffalo Wild Wings on Tuesday posted first-quarter profits of $10.6 million or 58 cents per share, up more than 20 percent over the same time last year. The chicken-wing purveyor bested analysts' profit projections by 1 cent per share, though revenue of $152.3 million was about 1 percent shy of forecasts.
High-flying Buffalo Wild Wings has rung up healthy sales growth over the past two years, an impressive feat in a restaurant industry flattened by recession. But Tuesday, the company said that during the first quarter, same-store sales at company-owned restaurants were up only 0.1 percent, and rose just 0.7 percent at franchised outlets.
Both numbers were below analysts' estimates. And they were the lowest quarterly growth rates Buffalo Wild Wings has recorded over the past two years, even though the U.S. economy has recently improved to the point where sales are finally perking up at many other restaurant chains.
April looks worse for Buffalo Wild Wings: Its same-store sales fell 3.7 percent at company-owned stores, and dropped 2.4 percent at franchised locations.
Still, Sally Smith, the company's chief executive, said its previously announced earnings growth goal of 20 percent for 2010 "may be achievable." But improvement in same-store sales and moderate chicken-wing costs "are key to meeting this goal," she said in a conference call with analysts.
The biggest culprit in the April sales softness was a decline in alcohol sales, as competitors served up significant discounts on drinks and food, Smith said.
