CMG: TOP LINE MISS ON MACRO

If this company is talking about a sluggish macro environment, it does not bode well for the rest of earnings season.

 

Chipotle Mexican Grill’s stock is down after hours following the company missing top line expectations in 2Q.  Earnings per share came in at $2.56, which was  11.6% above expectations of $2.29 . Same-restaurant sales grew 8% versus 2Q10, well below the 10% that consensus expected.  Despite restaurant operating margins of 29.2% and cost of sales coming down 80bps, versus 2Q11, as a percentage of sales, the revenue miss was front-and-center for investors. 

 

During the earnings call, management repeatedly mentioned the slowing economy as a drag on what was a disappointing quarter from a sales perspective:  “In fact we believe that our throughput performance would have been even better had we not seen some fall- off in transactions during the quarter, which we believe is due to the sluggishness in the overall economy and a slowing in consumer spending.” 

 

The stock was down 7-8% on the print but, following the conference call, is currently trading down 11%.

 

CMG: TOP LINE MISS ON MACRO - CMG eps recap

 

CMG: TOP LINE MISS ON MACRO - cmg pod1

 

CMG: TOP LINE MISS ON MACRO - cmg pod2

 

 

Howard Penney

Managing Director

 

Rory Green

Analyst