Chipotle Provides Optimist Outlook Though Profit Plunges 95%

Chipotle Mexican Grill Inc. reported profit tumbled 95% in the latest quarter amid concerns that pricy promotions to get customers back after illness outbreaks aren't working.

Shares of the company, down 38% over the past 12 months through Tuesday's close, lost another 1.8% after hours to $398.

Chipotle has given away millions of burritos and orders of chips and salsa or guacamole in hopes of drawing back customers wary after the Mexican chain's E. coli and Norovius outbreaks.

But the freebies haven't fully eased fears. During the September quarter, same-store sales dropped 21.9%, less than the 23.6% retreat in the second quarter but much worse than the 18.7% decline predicted by analysts surveyed by Consensus Metrix.

One bright spot in the quarterly report was Chipotle's forecast for fourth-quarter comparable restaurant sales declining by a low-single-digit percentage, which would be a marked improvement from recent results.

In all for the third quarter, Chipotle reported a profit of $7.8 million, or 27 cents a share, down sharply from a year ago's $144.9 million, or $4.59 a share. Analysts polled by Thomson Reuters were looking for per-share profit of $1.59.

Revenue fell 15% to $1.04 billion, edging below expectations for $1.09 billion.

Since the illness outbreaks, 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.

Write to Anne Steele at Anne.Steele@wsj.com

(END) Dow Jones Newswires

October 25, 2016 17:35 ET (21:35 GMT)

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