Wingstop Stock Drops 20% as Costs Weigh on Q3 Profits
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Key Takeaways
- Wingstop shares hit their lowest point since February on Wednesday after the chain’s third-quarter profits fell short of estimates.
- Same store sales also grew at a slower pace than expected, while Wingstop also lifted its estimate for new location openings this year.
- The chicken wing chain lifted its projections for expenses for the full fiscal year. Chicken wing prices and payroll expenses rose in the third quarter.
Wingstop ( WING ) shares tumbled Wednesday after the chicken-wing chain’s third-quarter profits fell short of analyst estimates.
The company reported $162.5 million in revenue on $1.2 billion in sales across its network of nearly 2,500 locations (Those sales are system-wide, which includes sales from both company-owned and franchised restaurants.) The revenue figure surpassed analyst estimates—compiled by Visible Alpha—by nearly $2 million, while sales fell about $20 million short.
Wingstop posted $25.7 million in net income , below the $28.2 million analysts had expected. The company’s costs climbed during the quarter because of higher chicken wing prices and higher payroll and stock-based compensation expenses.
Wingstop shares were down nearly 20% in recent trading, sliding to their lowest point since February.
For the full fiscal year, Wingstop lifted its projections for expenses by a few million dollars. It also lifted its expected range of net new restaurant openings to between 320 and 330, up from 285 to 300 previously, after opening a record 106 new locations in the third quarter.
Domestic same store sales grew by just under 21% year-over-year, a bit below the 21.6% growth analysts had expected.