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Is Zoe's Kitchen The Next El Pollo Loco?

Summary

Comparable sales increased 4%, 3.1% from higher prices.

Labor, depreciation and store operating expenses grew faster than revenue.

Shares likely to retest 52-week low of $23.17 after falling 3 of the last 4 trading sessions.

Pitched to investors as the next fast casual hit that resembles an early stage Chipotle (NYSE:CMG), Zoe's Kitchen (NYSE:ZOES) has failed to live up to expectations. It fell in 3 of its last 4 sessions after reporting mediocre results and weak guidance Monday, August 22nd, after the close. Recent insider selling, price increase driven comparable store sales growth and anemic margins are clear negatives for ZOES.

Source: Fin Viz

Comparable store sales, a crucial metric for retailers and restaurant companies, came in at 4% for Q2 2016. Investors were hoping for comparable store sales growth to be between 5 and 6%, the upper range side of management's 2016 guidance. Price increases drove more than 75% of ZOES' comparable store sales growth during Q2, with traffic and mix...


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