Oct 29 (Reuters) – Chipotle Mexican Grill shares rose 7% in premarket trading on Thursday on signs CEO Scott Boatwright’s efforts to bring back diners with new menu launches and a marketing push were paying off.
The burrito chain expects to exit the current quarter with comparable sales up around 3% to 4%, from the 2.1% rise posted in the three months through September, executives said on a post-earnings call on Wednesday.
Here are some details:
• Earlier this week, the company said it was bringing back its smoked brisket for a limited period starting November 5, in time for the holiday and football season
• Chipotle is countering costlier beef and higher freight charges from soaring diesel prices by raising menu prices by about 3% in the fourth quarter
• Operating margin dropped to 13.7% in the third quarter from 15.9% a year earlier, and adjusted earnings per share of 27 cents missed estimates
• “We underappreciated Chipotle’s willingness to sacrifice margin and invest in marketing to drive comparable sales,” said Andrew Charles, analyst at TD Cowen
• At least four brokerages cut price targets on the stock
• While signs of stabilizing traffic were emerging, a tougher macro environment could delay a meaningful revival in sales, Jefferies analysts said
(Reporting by Juveria Tabassum in Bengaluru; Editing by Sriraj Kalluvila)
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