By Ben Fox Rubin
Chipotle Mexican Grill Inc.'s (CMG) third-quarter profit rose
20% as the fast-casual burrito chain's revenue and restaurant
margins continued to rise.
But, shares sank 10% after hours to $257.03 as the company's
results missed expectations. As of Thursday's close, the stock was
already down 28% over the past three months.
The burrito chain, long an investor favorite, has seen its stock
dragged down since April amid investor concern about slower growth
in customer traffic and sales. The stock took a big hit in July
after it reported its second-quarter results, which included
weaker-than-expected revenue and substantially slower
same-restaurant sales growth.
Despite the stock declines, hedge fund manager David Einhorn
recently said Chipotle still had a "nosebleed valuation," and its
customers would prefer rival Yum Brands Inc.'s (YUM) new higher-end
"Cantina Bell" burritos and burrito bowls, sold at its Taco Bell
chain. His comments further pressured the stock.
Looking to maintain its strong growth, Chipotle is working on
expanding in Europe and has been pushing to speed up its sometimes
discouragingly long lines during the lunch and dinner rushes.
In the latest period, same-store sales rose 4.8%, below
expectations of 5.4% from analysts polled by Thomson Reuters. In
the past, Chipotle has posted double-digit same-store sales growth,
including an 11% rise a year ago.
Restaurant-level operating margin widened to 27.4% from 26.7%,
though costs for food, beverage and packaging rose 17%.
Chipotle posted a quarterly profit of $72.3 million, or $2.27 a
share, up from $60.4 million, or $1.90 a share, a year earlier.
Revenue grew 18% to $700.5 million, below recent growth above
20%.
Analysts predicted earnings of $2.30 a share on revenue of $702
million.
Write to Ben Fox Rubin at ben.rubin@dowjones.com
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