The Exchange

Buffalo Wild Wings stock lifted by upbeat earnings

The Exchange
Buffalo Wild Wings
.

View photo

Russell Akred brought the heat to the grand opening of Buffalo Wild Wings' new prototype restaurant. Akred ate 12 Blazin Hot Wings in two minutes to win the Blazin Challenge, Dec. 17,2012, In Cincinnati.(Photo by Tony Tribble/Invision for Buffalo Wild WIngs /AP Images)

This time, there were no shortfalls for Buffalo Wild Wings (BWLD).

Unlike the fourth quarter, when a slight revenue miss contributed to a selloff in the stock, the first quarter saw the wing-selling sports bar owner exceeding estimates and raising its earnings forecast for the year. As a result, its shares, down 9.2% for the year to date as of Monday's close  after doubling in 2013  were advancing 5.3% to $140.51 in recent trading, reducing that deficit by half.

Buffalo Wild Wings posted earnings of $1.49 a share on revenue of $367.9 million, up more than 20% from the year-ago quarter, and both topped Wall Street's consensus forecast. Same-store sales at company-owned locations rose 6.6%, higher than the 4.9% climb that was expected. Franchised restaurants had a comparable-store sales gain of 5%.

The Minneapolis-based company's cost of sales improved from a year ago, mainly because of lower prices for chicken wings and the benefits of its still fairly new weight-based order approach. Menu prices were raised some during the quarter, but not enough to fully account for the same-store sales improvements, which factor in check size, the number of customer transactions and the items being chosen by diners. What that means then is that guest counts almost certainly were higher, though the company historically doesn't keep that specific data point.

"I believe we did [expand traffic]." Buffalo Wild Wings CEO Sally Smith told Yahoo Finance after the report. "I don't think our mix has changed significantly, so my guess is [excluding pricing] that we saw some nice traffic increases."

Whereas a number of other restaurant operators said weather weighed down their numbers in the first months of this year, Buffalo Wild Wings didn't dwell on it. "We don't usually specifically call out weather unless there were some huge component," Smith said. "We don't spend a lot of time trying to quantify things that we really don't have any control over."

The Winter Olympics appear to have helped at least somewhat during the quarter, as Buffalo Wild Wings is practically as well know for its televised sports as its chicken. The NCAA basketball tournament also helped keep visitors up. Now baseball season is underway, and both the NBA and the NHL playoffs have started. The next big event arrives in a few weeks, when the World Cup begins in Brazil.

With the results as they were, and its expectations for the months ahead, Buffalo Wild Wings raised its profit growth outlook, saying it now believes full-year earnings will rise 25%, up from the 20% projection it previously had.

Shares of Buffalo Wild Wings were among the strongest of all U.S. restaurant stocks last year, jumping 102.1%, around twice the advance in a broad group of restaurants tracked by Yahoo Finance. The stock was also up each of the past five years; its average gain each time was about 28%.

Rates

View Comments (0)