Buffalo Wild Wings (NASDAQ: BWLD) reported its third quarter earnings for fiscal year 2017 and beat estimates in earnings, but fell short of revenue. Shares surged over 20 percent during Thursday’s trading hours.
The American sports bar chain reported revenue of $496.7 million, 0.5 percent increase year over year, also falling short of analysts’ estimates of $502 million. The company reported an EPS of $1.36, 5.4 percent increase year over year, and beating analysts’ estimates of $0.79.
Same store sales decreased 2.3 percent year over year, while company-owned franchises fell 3.2 percent year over year.
Sales were heavily impacted due to the unfavorable rise in price of traditional chicken wings. The company’s cost of sales was 30.8 percent, compared to last year’s same quarter of 28.9 percent.
Buffalo Wild Wings stated that traditional wings were $2.16 per pound in the third quarter, representing a 25.6 percent increase from $1.72 year over year. The company is still expecting wings to rise another 11 percent for the rest of the year.
But the company’s approach to cost savings and promotions helped it avoid a bigger loss. The shift from traditional wings to boneless wings due to the rising price contributed significantly.
"Our teams are executing on the cost initiatives of our fiscal fitness program and we exceeded our goal in the third quarter. These savings helped deliver adjusted income from operations above our expectations,” said Sally Smith, President and Chief Executive Officer, “Combined with our cost savings initiatives and service excellence focus, we are optimistic these actions will deliver an improving bottom line."
Buffalo Wild Wings has now raised its guidance for the fiscal year. The company forecasts an EPS of $4.85 to $5.15. Previously, in July, the company had lowered its earnings forecast from $4.50 to $5 a share from the forecast prior to that of $5.45 to $5.90 a share. The company expects same-store sales still to be negative but increase to -1.5 percent.