Coverage: Chipotle hit by hurricanes, avocado prices and hack

Chipotle Mexican Grill Inc. on Tuesday reported third-quarter earnings that missed analysts’ forecasts following recent hurricanes, high avocado prices and costs related to a data breach.

Akin Oyedele of Business Insider had the news:

The fast-casual chain reported earnings per share of $0.69 and adjusted EPS of $1.33, missing analysts’ forecast for $1.63 according to Bloomberg. Revenue totaled $1.13 billion, missing the estimate for $1.14 billion. Sales at stores open for at least one year rose 1% (1.2% forecast).

Chipotle also lowered its outlook for the year. It projected new restaurant openings in the low end of its previously announced range of 195-210. It now sees same-store sales growth of 6.5%, down from an older forecast for growth in the high single digits.

Ahead of the earnings release, analysts were focused on the mixed reviews of Chipotle’s newly introduced queso.

Last Friday, RBC’s David Palmer cut his price target on the stock to $330 from $400 on the expectation that queso and other marketing efforts would disappoint.

Craig Giammona of Bloomberg News focused on the stock price drop:

Chipotle Mexican Grill Inc. fell as much as 11 percent in late trading after recent hurricanes and a hacker attack hammered earnings last quarter, adding obstacles to the burrito chain’s elusive comeback.

Profit amounted to 69 cents a share last quarter, net of expenses tied to the data-security breach earlier this year and hurricanes Harvey and Irma. Analysts had estimated about $1.63 a share, according to data compiled by Bloomberg.

The results suggest that Chipotle’s turnaround effort remains slow going. The Denver-based company has been reeling since an E. coli outbreak struck in 2015, crushing its sales, profit and stock price. The chain had started to recover in the past year, but then a norovirus incident in Virginia — along with a video of mice at a Dallas location — sparked a fresh round of negative headlines.

“There is a sense that Chipotle’s rebirth is running out of steam,” said Neil Saunders, managing director of GlobalData Retail. “There is no single reason for the slowdown; rather, a number of factors have conspired in making this a somber quarter for the company.”

Lucinda Shen of Fortune reported that the problems came despite a big TV ad campaign and a queso rollout:

“The third quarter was impacted by several items…related to hurricanes from this summer, historically high avocado costs, store closures, and a data security incident,” Chipotle Chief Financial Officer John Hartung said in the company’s Tuesday earnings call, noting that 425 locations were in the path of either Hurricane Harvey, or Hurricane Irma. “We believe the combination negatively impacted earnings per share by $1.05.”

Still, even when adjusting for those one-time items, Chipotle’s earnings came in below expectations, at about $1.33 per share against the Wall Street consensus of $1.63.

Chipotle is also expecting fewer restaurant openings than its previously disclosed range of 195 to 210 locations.

The company’s earnings miss also came despite Chipotle rolling out the company’s “largest ever telephone advertising campaign” to promote it’s newest item, queso, according to Chief Financial Officer John Hartung during Chipotle’s earnings call Tuesday. Queso however has reportedly received mixed responses on social media, prompting RBC Capital analysts to reduce their estimates for Chipotle’s earnings earlier this week.