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Actionable news in CMG: CHIPOTLE MEXICAN GRILL Inc,

Chipotle shares tank after big earnings miss

Chipotle Mexican Grill shares tanked after the restaurant chain missed analysts' expectations, and trimmed back its same-store sales forecast.

Here's how the company did compared to what Wall Street expected:

  • Adjusted EPS: $1.33 vs. $1.63, according to Thomson Reuters
  • Revenue: $1.13 billion vs. $1.14 billion, according to Thomson Reuters
  • Same-store sales grew 1 percent vs. expected growth of 1.2 percent, according to StreetAccount

The Mexican restaurant chain introduced queso nationwide in September. The cheesy sauce has received sharp backlash from some on social media like Twitter, but Chipotle is standing behind it nonetheless.

The introduction immediately lifted sales in the high single digit percents before leveling off, Chipotle said. Sales rose again after Chipotle started advertising before leveling off again. Now, about 15 percent of customers continue to order queso.

"Despite several unusual impacts during the quarter, including the impact of hurricanes, we maintained our focus and saw some encouraging signs," said Steve Ells, founder, Chairman and CEO of Chipotle, in a press release. "Our leadership remains focused on setting the foundation for future growth, and we are confident in our teams' ability to deliver against those plans."

In the third quarter, Chipotle reported net income of 69 cents per share, compared with 27 cents per share in the same time last year. After stripping out 13 cents a share in impacts from Hurricanes Harvey and Irma, and 64 cents a share in costs from a previously disclosed data breach in the spring, Chipotle reported adjusted earnings of $1.33 a share.

Analysts surveyed by Thomson Reuters, had expected the company to earn $1.63 a share.

Chipotle refined its estimate for the year. It is now calling for comparable sales growth of 6.5 percent. Previously, it expected growth in the high single digits.

Chipotle opened 38 restaurants and closed 3 during the quarter. It opened 55 restaurants and closed 1 in the same time last year. Chipotle trimmed back its plans for new restaurant openings to the low end of its previously forecasted range of 195 to 210.

Analysts have doubted whether queso could help lift Chipotle's sales. Earlier this month, Cowen analyst Andrew Charles wrote in a note to investors the firm does not expect queso to be a sustainable sales driver.

Chipotle has fought to win back customers after facing numerous foodborne illness outbreaks since 2015. A July norovirus outbreak at a restaurant in Sterling, Virginia, may have set back its progress. Chipotle said the restaurant's leadership did not follow safety protocols and a staff member worked while sick.

Chipotle shares are down about 14 percent so far this year.

This is breaking news. Please check back for updates.


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