The operator of more than 830 quick service Mexican restaurants said it earned $17 million, or 52 cents per share, in the quarter. That is compared to earnings of $17.5 million, or 53 cents per share, in the year-ago period.
Revenue increased 20% to $345.3 million primarily due to the 39 new restaurants that opened during the quarter, and same-store sales grew 3.5%. Even though the results came in weaker than a year ago, they did manage to top analysts expectations of a profit of 49 cents per share on revenue of $339.4 million, according to those polled by Thomson Reuters.
"Given the challenges we faced in 2008, I am extremely proud of the results we were able to deliver," said Chairman and Co-CEO Steve Ellis.
Despite topping their expectations, some analysts are urging caution on CMG shares.
A Jeffries (NYSE: JEF) analyst wrote in a client note that "Chipotle was asked numerous times to comment on current same-store trends, but in sticking with precedent, offered little -- only saying that the 'low single digit' 2009 same-store guidance reflects early first-quarter trends." The analyst currently has a "hold" rating on CMG shares.
While the company's same-store sales grew to 3.5% from 3.1% for the prior three month period, most of that growth was from price increases of about 7% in the quarter, which offset a decline in customer count. While the same-store sales figure is headed in a positive direction it is still down considerably from the June quarters' figure of 7.1% and the March quarters' figure of 10.2%.
Chief Financial Officer John Hartung noted that Chipotle's days of raising prices without pushback from diners appear to be coming to an end. "Given the economic environment, we have seen resistance to the most recent price increases," he said.
A quick glance at Chipotle's share price confirms that all is not well.
It closed at $61.98 on Dec. 31, 2008, and even with last week's rally it's still a good ways off that level. The Jeffries analyst says there's a strong correlation between unemployment and consumer confidence and the concept's traffic. He thinks this implies traffic in December and January "likely tailed off" from levels in October and November.
This could likely hurt sales at Chipotle as the recession deepens, as the chain is higher-priced than most quick-service restaurants because it serves premium-priced, naturally raised meats and locally grown produce.
Still, Chipotle's management is optimistic. They're continuing with their $100 million share repurchase program and expect to open between 120 and 130 new restaurants in 2009. The company believes its strong balance sheet will enable it to emerge from the downturn a stronger company.
Louis Navellier's PortfolioGrader Pro, which offers free ratings for nearly 5,000 Wall Street stocks, rates CMG a D or sell.