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Chipotle Mexican Grill Q4 sales decreased 4.8%

Staff Writer |
Chipotle Mexican Grill provided preliminary financial and operating results for the fourth quarter 2016.

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Comparable restaurant sales for the quarter decreased 4.8%, which includes the benefit of 0.5% related to previously deferred revenue that was recognized in the fourth quarter.

Comparable restaurant sales decreased 20.2% in October 2016, decreased 1.4% in November 2016, and increased 14.7% in December 2016.

"Our sales comparisons are lapping an easier compare due to lower sales levels in November and December 2015.

"We anticipate our restaurant-level operating margin for the fourth quarter 2016 to be in the 13% to 14% range. And we also expect pre-tax operating income of approximately $30 million to $32 million.

"During the quarter we incurred higher expenses compared to our originally-forecasted amounts in other operating costs, driven by increased promotional spend and costs related to testing television advertising.

"Our marketing and promotional expenses during the quarter totaled approximately 4.7% of sales. We also incurred higher food costs compared to our originally-forecasted amounts as a result of increased market costs for avocados.

"We anticipate reporting diluted earnings per share of $0.50 to $0.58 per share. Final year-end accounting adjustments and related tax expenses may impact these estimates.

"We anticipate a higher annual effective tax rate for the full year 2016 of 39% to 45% due to higher state tax rates, not qualifying for the federal R&D tax credits in 2016, and non-deductible items on overall lower pre-tax operating income.

"The increase in our full year estimated tax rate has a magnified effect on our tax rate in the fourth quarter. We expect the 2017 effective tax rate to be lower than the 2016 effective tax rate," the company said.

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