Wednesday, February 3, 2016
Chipotle's horrible quarter was just as bad as they thought
Chipotle reported its third-quarter earnings results on Tuesday, its first since the E. coli outbreak linked to it.
The restaurant chain confirmed that its quarterly sales were negative for the first time since it went public about a decade ago.
Same-store sales, at locations open for at least one year, fell 14.6%, in line with its warning last month.
Chipotle reported adjusted earnings per share of $2.17 ($1.81 expected according to Bloomberg), and revenues of $999.7 million ($1.01 billion forecast).
In the earnings release, Chipotle co-CEO Steve Ells said the fourth quarter was "the most challenging period in Chipotle’s history."
Co-CEO Monty Moran added that 2016 will be "a very difficult year", even as the company anticipates a pickup in the number of customers.
The release also disclosed that Chipotle was served a subpoena on January 28 that broadens the scope of a prior one from the US Attorney's office for the District of California, amid a criminal investigation. It requires the company to produce information related a norovirus outbreak in a Simi Valley, California restaurant in August.
The big E. coli outbreak linked to Chipotle, first reported in October, sickened 55 people across 11 states. Also, 120 Boston College students showed norovirus symptoms after they ate at the restaurant during the quarter.
On Monday, the Centers for Disease Control and Prevention (CDC) said the E. coli outbreaksappeared to be over.
But the damage is done, and it's ugly. Since news of the first outbreak crossed on October 31, the stock has fallen about 25%.
In after-hours trading, the stock rose by as much as 3% before dropping by the same magnitude.