Chipotle Profit Plunges, Sales Slide
July 21 2016 - 5:30PM
Dow Jones News
Chipotle Mexican Grill Inc. profit dropped 82% in its June
quarter as slowly recovering traffic at the beleaguered chain was
offset by costly promotions to lure customers back after an illness
outbreak last year.
In February and March during the prior quarter, Chipotle gave
away over six million free burritos or bowls and 1 million orders
of chips and salsa or guacamole in hopes of luring back wary
customers. In the quarter the company posted its first loss as a
public company.
But the freebies haven't fully eased fears.
For the latest quarter, same-store sales dropped 23.6%, less
than the 29.7% retreat posted in the first quarter but worse than
the 20.4% decline predicted by analysts cited by FactSet.
Analysts at Morgan Stanley have said that a full recovery of
sales could take years, citing their survey results that showed
about 25% of the chain's customers have stop going or aren't going
as frequently.
Over all, for the second quarter, Chipotle reported a profit of
$25.6 million, or 87 cents a share, far down from $140.2 million,
or $4.45 a share, a year earlier.
Revenue declined to $998.4 million from $1.2 billion.
Analysts polled by Thomson Reuters expected a profit of 93 cents
a share and revenue of $1.1 billion.
Shares of the company, down 38% over the past year, fell 1.9% to
$410 after hours. The stock lost roughly half its value from last
year's record high through last month's low.
In February, the Centers for Disease Control and Prevention
declared an end to Chipotle's E. coli contamination that sickened
55 people in 11 states.
Since, Chipotle has revised food-preparation steps, installed a
new loyalty rewards plan and produced a YouTube video that takes
aim at competitor fast-food restaurants.
The company has had additional unwanted attention in recent
weeks with the charging of its chief creative and development
officer Mark Crumpacker in a New York City cocaine sting. Mr.
Crumpacker was allegedly among 18 buyers indicted in the drug ring
and was arraigned on seven counts of criminal possession of a
controlled substance in the seventh degree, a misdemeanor. The
company placed him on administrative leave. A call to his lawyer
wasn't immediately returned.
Write to Ezequiel Minaya at ezequiel.minaya@wsj.com
(END) Dow Jones Newswires
July 21, 2016 17:15 ET (21:15 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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