Chicken wing prices weigh on Buffalo Wild Wings' Q3
Oct. 26, 2017
by Erica Shaffer
MINNEAPOLIS – Shares in Buffalo Wild Wings Inc. surged 20 percent in after-hours trading after the company beat analysts’ expectations for the third quarter.
The company reported adjusted net earnings of $21.2 million, or $1.36 per share, which beat analyst expectations of about $0.79 per diluted share. Net earnings for the most recent quarter decreased 10.7 percent from $23.7 million, or $1.29 per diluted share reported a year ago.
Total revenue climbed $2.5 million to $496.7 million in the third quarter, compared to $494.2 million in the third quarter of 2016.
“Our teams are executing on the cost initiatives of our fiscal fitness program and we exceeded our goal in the third quarter,” CEO Sally Smith said in a statement. “These savings helped deliver adjusted income from operations above our expectations. The recent Tuesday promotion shift from traditional to boneless wings at company-owned restaurants will continue to improve cost of sales while traditional wing prices remain elevated. Combined with our cost savings initiatives and service excellence focus, we are optimistic these actions will deliver an improving bottom line.”
Prices for traditional chicken wings were $2.16 per lb. in the third quarter, representing a $0.44 increase, or 25.6 percent above the year-ago comparable period average of $1.72. Traditional wings as a percent of cost of sales was 28.8 percent in the third quarter, the company said.
In response to rising prices for chicken wings, Buffalo Wild Wings switched from a half-price wings on Tuesdays promotion to a buy-one, get-one-free boneless wings promotion which proved to be more profitable for the company.
Sales at company owned restaurants advanced 0.5 percent to $473.0 million during the third quarter, driven by the addition of 21 company owned restaurants.
Franchise royalties and fees climbed 1.0 percent to $23.7 million for the quarter, compared with $23.5 million reported in the year-ago quarter driven by 31 additional franchised restaurants.
In its guidance for 2017, the company expects same-store sales growth of approximately -1.5 percent; earnings per diluted share of $4.30 to $4.60; adjusted earnings per diluted share of $4.85 to $5.15; and capital expenditures of approximately $80 million.