Buffalo Wild Wings Plunges After Slashing Its ForecastBy and
Higher wing prices, sluggish sales are squeezing company
CEO agreed last month to step down following proxy fight
Buffalo Wild Wings Inc., squeezed by higher chicken costs and slower sales, sees a bleak year ahead.
The restaurant chain slashed its earnings forecast and now expects same-store sales to drop 1 percent or 2 percent this year. The outlook, which followed a quarter that also fell short of Wall Street projections, sent the shares down as much as 13 percent.
There’s little relief in sight for Buffalo Wild Wings shareholders, including activist investor Marcato Capital. That firm led a proxy fight against the company earlier this year and won three seats on the board last month. The shake-up also led Chief Executive Officer Sally Smith to agree to step down.
The company projected earnings of $4.50 to $5 a share this year, excluding some items, down from a previous forecast of as much as $5.90. Analysts estimated $5.26 on average. Profit last quarter amounted to 66 cents, excluding some items. That was roughly half the $1.05 projection of Wall Street. Company-owned same-store sales fell 1.2 percent in the period, short of the break-even performance predicted by analysts.
Buffalo Wild Wings had earlier predicted a 1 percent gain for same-store sales this year.
The shares fell as low as $106.65 on Thursday, the biggest intraday drop since April 2016. They had already lost 21 percent of their value this year before the results were released on Wednesday.
Smith plans to leave by the end of the year -- or sooner if a successor can be found. She held the job for two decades, making her one of the restaurant industry’s most tenured executives. The company grew for years under her watch, but the same-store sales slump put her in the cross hairs of Marcato, which controls a nearly 10 percent stake in Buffalo Wild Wings.