Call me superficial. The Buffalo Wild Wing corporation just opened a store in Princeton. Upon seeing it, I had a feeling the stock had peaked. Upon dining in it, I knew it was heading lower. The service and food are of the catastrophic varietal. They had one job to do, which was to make me some quality chicken wings. They failed. As such, the shares are inexorably lower by 12% in the after-hours blood session.
Via Briefing
- Total revenue increased 15.4% to $508.3 million
- Company–owned restaurant sales increased 16.6% to $483.9 million
- Same–store sales decreased 1.7% at company–owned restaurants and 2.4% at franchised restaurants
- Net earnings increased 12.8% to $32.8 million from $29.0 million, and earnings per diluted share increased 13.5% to $1.73 from $1.52
Sally Smith, President and Chief Executive Officer, commented, “Our total revenue in the first quarter increased 15.4%, when compared to the prior year, resulting from continued unit development and franchise acquisitions over the last 12 months. We are dissatisfied to report a same-store sales decline and we’re undertaking several sales-driving initiatives to regain momentum. We were able to manage costs and improve our restaurant-level margin, and earnings per diluted share increased 13.5% year-over-year to $1.73.”
Total revenue increased 15.4% to $508.3 million in the first quarter, compared to $440.6 million in the first quarter of 2015. Company–owned restaurant sales for the quarter increased 16.6% over the same period in 2015, to $483.9 million, driven by 100 additional Buffalo Wild Wings® restaurants at the end of the first quarter of 2016, partially offset by a same-store sales decrease of 1.7%. Franchise royalties and fees decreased 5.0% to $24.3 million for the quarter, versus $25.6 million in the first quarter of 2015. This decrease is attributed to seven fewer franchised Buffalo Wild Wings locations and a same-store sales decrease of 2.4% at franchised Buffalo Wild Wings restaurants in operation at the end of the period, compared to the same period in 2015.
Average weekly sales for company-owned Buffalo Wild Wings restaurants were $62,829 for the first quarter of 2016, compared to $64,851 for the same quarter last year, a 3.1% decrease. Franchised Buffalo Wild Wings restaurants in the United States averaged $65,636 for the period, versus $67,075 in the first quarter a year ago, a 2.1% decrease.
Other income in 2016 consisted primarily of a gain related to the valuation of contingent consideration for a franchise acquisition of $1.1 million, partially offset by interest expense of $0.9 million.
Under the previously announced share repurchase authorization, 173,892 shares were repurchased during the first quarter of 2016 for a total of $25 million.
For the first quarter, net earnings increased 12.8% to $32.8 million, versus $29.0 million in the first quarter of 2015. Earnings per diluted share were $1.73, compared to first quarter 2015 earnings per diluted share of $1.52.
2016 Outlook
Ms. Smith remarked, “We are focused on sales-driving initiatives to regain momentum in 2016. To strengthen our FastBreak™ lunch program, we’re piloting a speed of service guarantee. We’re promoting Wing Tuesdays® while evaluating different pricing and bundling options for this value day. Soccer is a growing sport in the United States and we’ll be the place to watch all the action on the pitch for the major tournaments this summer.”
Ms. Smith concluded, “The Buffalo Wild Wings brand remains strong and poised to deliver long-term earnings growth. In 2016, we’re continuing our development of new company-owned and franchised Buffalo Wild Wings restaurants in the United States and we are aggressively remodeling locations. Given our recent sales trends and an increasing outlook for the cost of traditional chicken wings, we believe earnings per diluted share in 2016 should be $5.65 to $5.85.”
For 2016, the company expects the following new unit development:
- Approximately 40 company-owned Buffalo Wild Wings restaurants
- 30 to 35 franchised Buffalo Wild Wings locations in the United States
- 12 to 15 franchised Buffalo Wild Wing locations internationally
- 6 company-owned and 4 franchised R Taco restaurants
- Continued unit expansion by PizzaRev
For 2016, the company expects the following:
- Improving same-store sales
- Deflationary food costs, excluding traditional chicken wings
- Depreciation and amortization expense of $150 to $155 million
- Share repurchase activity of approximately $100 million
- Earnings per diluted share of $5.65 to $5.85
- Capital expenditures of approximately $190 million, excluding additional franchise acquisitions or emerging brand investments
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“The Fly” does not strike me as a chicken wing eater. I’m very disappointed in you…
That POS, APPL, the “Eastman Kodak of the 21st Century”
is getting pounded for 5% of its market cap.
The Apple Polishers will try to prop it up, on its way to the teens by the twenties. Don’t flaa for the gag.
Love your headline, hate the stock, wings are OK
“sales-driving initiatives” ?
How about food quality, customer experience and image?