Buffalo Wild's EPS Falls; Wing Costs Dip

Investor's Business Daily

Buffalo Wild Wings (BWLD) flew well short of earnings estimates, but the sports bar chain gave a bullish full-year outlook late Monday, citing improving sales and lower chicken wing prices. Meanwhile, Texas Roadhouse shares rose on better-than-expected sales and earnings.

Buffalo Wild Wings said Q1 EPS fell 11% to 87 cents, missing views by 12 cents.

Sales rose 21% to $304.4 million, above estimates of $302.9 million. Same-store sales at company-owned restaurants were up 1.4%, after falling 2.8% in February. Same-store sales at franchised restaurants rose 2.2%.

Buffalo Wild noted that the chain had one less NFL game in Q1 than it did a year earlier. The chain relies heavily on major sporting events for traffic.

Average weekly sales for company-owned restaurants rose 3.3% to $56,953 and 4.8% at franchised restaurants to $60,050.

Franchise royalties and fees increased 6% to $19.9 million, and it added 9 franchised restaurants during Q1. Buffalo Wild Wings added 20 restaurants in North America during the quarter and now has more than 900.

Buffalo Wild blamed the weaker Q1 earnings in large part on its new Guest Experience model that helped push labor costs higher vs. a year earlier. But the chain said that's already driving "incremental" sales growth.

April same-store sales at company-owned locations rose 5.2% vs. a year earlier. Franchisee comps jumped 5.8%.

The sports bar known for its chicken wings and wide array of sauces said it is on target to see 17% growth in net earnings for the year.

"Wing costs are trending down, easing pressure on our margins, and when we transition to selling wings in consistent portions in July, it will lessen the impact of yield variances," CEO Sally Smith said in the earnings release.

Buffalo Wild Wings rose sharply in initial late trading, but erased those gains as the after-hours session wore on. The chain fell less than 1% in the stock market during the regular session.

Texas Roadhouse (TXRH), a casual-dining chain that focuses on steaks, also reported Q1 results late Monday. Q1 earnings rose 20% to 36 cents per share, beating views by 2 cents. Sales rose 30% to $359.6 million, modestly above analyst estimates of $357.9 million. Same-restaurant sales rose 3.5% at company locations and 4.5% at franchise spots.

Solid sales and traffic trends "continued through the first four weeks" of Q2, said CEO Kent Taylor in a statement.

Texas Roadhouse did note that it expects food cost inflation of 6% to 7% during the year.

Shares rose 7% late to around 22.80. That's on top of an 8% advance over the last five sessions.

The Retail-Restaurants group is ranked No. 19 out of the 197 industry groups IBD tracks.

Domino's Pizza (DPZ) is slated to report quarterly results before Tuesday's open. Analysts expect a 17% EPS jump to 55 cents. The pizza joint's sales are seen rising 8% to $413.77 million.

Bloomin' Brands (BLMN), parent of Outback Steakhouse, reports after Tuesday's market close. Analysts sees earnings falling 12% to 44 cents a share. Sales likely rose 3% to $1.08 billion.

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