Chipotle Mexican Grill Inc. (CMG:US) plunged the most since its initial public offering more than six years ago after reporting second-quarter sales that trailed analysts’ estimates.
Chipotle tumbled (CMG:US) 22 percent to $316.98 at the close in New York, for the biggest drop since its IPO in January 2006. Chipotle had advanced 20 percent this year through yesterday.
Slower U.S. consumer spending hurt the chain’s sales with smaller gains as the year proceeded, Chief Financial Officer Jack Hartung said yesterday on an analyst call, where he discussed the Denver-based company’s results. Extreme weather may boost food costs later this year and next, Hartung said.
“If consumer spending slows further, a further slowdown in Chipotle” comparable sales is likely, Bryan Elliott, an analyst with Raymond James & Associates in Atlanta, wrote in a note. The stock’s “historical outsized” price-to-earnings premium relative to peers could be reduced by “less outsized” sales gains, wrote Elliott, who rates the shares underperform, the equivalent of a sell.
Second-quarter revenue increased 21 percent to $690.9 million, the company said yesterday in a statement after the market closed. That compared with an average analyst estimate of $707.3 million, according to data compiled by Bloomberg.
Net income rose 61 percent to $81.7 million, or $2.56 a share, from $50.7 million, or $1.59, a year earlier, the company said. Analysts surveyed by Bloomberg had estimated an average of $2.30.
Chipotle, which last year opened its first Asian-themed eatery, has sought to boost sales by touting sustainably raised and locally sourced ingredients. Sales at Chipotle stores open at least 13 months climbed 8 percent. Same-store sales are an indicator of a retailer’s growth because they include only older locations.
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