BWLD

Higher Wing Prices Hurt Earnings Expansion at Buffalo Wild Wings

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Tuesday morning, Buffalo Wild Wings (click ticker for report: ) announced solid fourth quarter results. Revenue surged 38% year-over-year to $304 million, easily exceeding consensus estimates. Earnings, on the other hand, grew 22% year-over-year to $0.89 per share, falling short of consensus estimates by several cents. Revenue growth at company-owned restaurants totaled 39% year-over-year to $283 million, though same-store sales performance was somewhat modest (up 5.8% compared to the year-ago period). This compared unfavorably to franchise-owned stores, where same-store sales advanced 7.4% versus the fourth quarter of 2011. We think the divergence was a result of franchise-owned restaurants being comparatively younger stores than the more mature company-owned restaurants (we believe performance will eventually converge, however). We are a bit worried … Read more

McDonald’s Going After the Wing Market

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In a somewhat surprising move, McDonald’s (click ticker for report: ) is following up the chicken McBites with its own iteration of chicken wings. The “Mighty Wings” are currently being rolled out across 500 Chicago area restaurants (one location we visited advertised them, but had yet to receive the raw goods). Although wing prices are high and have been hurting profit expansion at Buffalo Wild Wings (click ticker for report: ), we like the move. Not only does it fulfill the need for the company to diversify its menu offerings, but we also think the new menu item could generate incremental revenue (assuming the wings are differentiated from other McDonald’s chicken offerings). Buffalo Wild Wings, for example, is still experiencing … Read more

Buffalo Wild Wings Suffers as Inflation Hurts the Bottom Line

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Fast growing restaurant chain Buffalo Wild Wings (click ticker for report: ) announced weak third quarter results Tuesday afternoon. Revenue grew 25% year-over-year to $247 million, but that figure was a bit lower than consensus estimates. Earnings fell 7% to $0.57 per share, a few cents lower than consensus expectations. The big drag on profitability has been wing prices, which are 70% higher than a year ago at $1.97 per pound. As a result, cost of sales jumped 270 basis points to 31.2%. Management noted that wing prices have remained high throughout the beginning of the fourth quarter, and profitability is expected to increase 15% year-over-year in 2013. CEO Sally Smith noted that non-alcoholic beverage sales are down—something we heard … Read more

Best Idea Buffalo Wild Wings Posts Strong First-Quarter Results

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Best idea Buffalo Wild Wings () reported strong first-quarter results Tuesday that support our view that the firm’s expansion efforts are still in the early innings. Though we liked the firm’s quarter, Buffalo Wild Wings is getting a bit pricey at these levels and we may look to scale back our position even further in the portfolio of our Best Ideas Newsletter on continued strength. Our fair value estimate for the bar-and-restaurant chain remains unchanged. The firm’s first-quarter revenue advanced an impressive 37.9%, as sales from company-owned restaurants jumped more than 40% from the same period a year ago. Same-store-sales increased 9.2% at company-owned restaurants and 7.3% at franchised restaurants, indicating that the Buffalo-Wild-Wings concept continues to resonate with consumers. The … Read more