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Red Robin shares sink after CEO resignation, same-store sales decline

Tonya Garcia

Red Robin Gourmet Burgers Inc. shares sank 6% in Thursday premarket trading after the restaurant chain announced its chief executive's resignation and a 3.6% decline in same-store sales for the first three periods of the first fiscal quarter, on a constant currency basis. CEO Denny Marie Post is stepping down following a meeting with the board, effective April 3, 2019. Board Chair Pattye Moore will serve on an interim basis while a search committee finds a successor. Moore blamed the "challenging weather" in a number of U.S. regions for the same-store sales decline. The FactSet consensus is for a 2.1% decline. "We attribute the weakness to the competitive environment but also the company's decision, starting in the first quarter last year, to significantly reduce labor hours in the stores, which we believe directly impacted service and, subsequently, traffic," wrote Quo Vadis president John Zolidis in a note. "Accordingly, we believe the company will need to reinvest in labor to bring back service levels and customer visits, but even absent that we expect a rude reset of the outlook. We would continue to avoid Red Robin shares." The company's stock has rallied 5.6% in 2019, but has taken a 52.5% nosedive over the last year. The S&P 500 index is up 8.7% for the last 12 months.