News

Buffalo Wild Wings' 20% revenue bump not good enough for analysts

CEO Sally Smith acknowledges numbers are lower than expected but said the chain is experiencing growth.

February 4, 2016

Although Q4 revenue was up 19.9 percent for Buffalo Wild Wings, it didn't hit analysts' expectations, as they predicted earnings of $1.48 a share on $507 million in revenue. CEO Sally Smith reported Wednesday that the chain ended the quarter at $1.32 per share on $490 million in revenue, and that although the numbers were lower than expected, the chain is growing. Last year's same-store sales increased 4.2 percent at company-owned restaurants and 2.5 percent at franchised locations, for example.

"Same-store sales growth in the fourth quarter of 1.9 percent at company-owned restaurants and 0.1 percent at franchised locations did not meet our expectations, although they continued to outpace the casual dining industry," Smith said. "We estimate the holiday shifts for Halloween and Christmas negatively impacted fourth quarter same-store sales by 30 basis points. Our restaurant sales increase of 21.3 percent in the fourth quarter was driven by 105 additional company-owned restaurants this year."

Other Q4 highlights included:

• Total revenue increased 19.9 percent to hit $490.2 million
• Company-owned restaurant sales increased 21.3 percent to hit $466.4 million
• Same-store sales grew 1.9 percent at company-owned restaurants and 0.1 percent at franchised restaurants
• Net earnings increased 24.4 percent, to $25.3 million, from $20.3 million, and earnings per diluted share increased 23.4 percent to $1.32 from $1.07

"Net earnings increased 24.4 percent during the fourth quarter primarily from increased revenue and leveraging food and labor costs as a percentage of restaurant sales," Smith said. "Depreciation and amortization as a percentage of total revenue increased compared to the prior year as a result of our new restaurant development and franchise acquisitions. We also recorded $3.3 million in pre-tax loss on asset disposals and impairments during the quarter. These non-cash charges tempered our net earnings growth for the year."

For the fiscal year 2015, net earnings increased 1.0 percent o $95.1 million, versus $94.1 million in the fiscal year of 2014. Earnings per diluted share were $4.97, compared to fiscal year 2014 earnings per diluted share of $4.95.

2016 outlook

Same-store sales increased 0.3 percent at company-owned restaurants and decreased 1.5 percent at franchised locations for the first four weeks of the first quarter of 2016, compared to increases of 12.7 and 12.4 percent respectively, for the same period last year, according to the company.

"The Buffalo Wild Wings brand is strong and vibrant and we continue to invest to drive sales and deliver earnings growth for our shareholders," Smith said. "With our ongoing unit growth and operational diligence, our earnings per share goal for 2016 is $5.95 to $6.20, representing 20 to 25 percent growth over fiscal 2015."

For 2016, the company expects the following new unit development:

• 45 to 50 company-owned Buffalo Wild Wings restaurants
• 30 to 35 franchised Buffalo Wild Wings locations in the U.S.
• 12 to15 franchised Buffalo Wild Wing locations internationally
• Six company-owned and four franchised R Taco restaurants
• Continued unit expansion by PizzaRev

For 2016, the company also expects:

• Single-digit, same-store sales growth, including modestly positive traffic
• Deflationary food costs, excluding traditional chicken wings
• Depreciation and amortization expense of $155 to $160 million
• Share repurchases of approximately $100 million, earnings per diluted share of $5.95 to $6.20
• Capital expenditures of approximately $200 million, excluding franchise acquisitions and emerging brand investments