Brocker.Org: WINGSTOP: Hen wings are hurting our organization (WING)

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Wingstop is the fastest-increasing chicken chain in the United States. Notably, the firm reached the feat with out partaking in any type of disastrous price war, and by maintaining its organization very simple.

Price pressures in the business, merged with superior advancement anticipations of analysts, nonetheless, have not been much too type on the firm.

The firm released its earnings report for the fourth quarter of 2016 on Thursday, recording an impressive twenty.three% maximize in product sales as opposed to This fall 2015.

Internet cash flow climbed 13% to $four.three million ($.fifteen for each diluted share) from $three.eight million ($.13 for each diluted share).

Nonetheless, earnings even now defeat analyst anticipations only marginally, although the amazing product sales advancement figure skipped. Shares are down about one.three% on Friday.

In the earnings call following the effects, Michael F. Mravle, chief economical officer of Wingstop, pointed especially to price tag pressures that have troubled the firm.

“Price of product sales increased to $seven million from $5.six million in the prior year fourth quarter. As a percentage of firm-owned cafe product sales, price tag of product sales increased 590 foundation details to seventy six.one% from 70.2%,” he claimed.

In individual, he pointed to two things that led to margin tension: bigger chicken wing selling prices and bigger labor prices. “The maximize was pushed generally by 13.one% inflation from bone-in chicken wings, a four% in the normal sizing of the chicken wings and ongoing labor investments in roster measurements and staffing.”

Mravle added that he predicted enter prices to continue on growing in the coming months. “In Q1 2017, we count on about 10% inflation on our bone-in chicken wings above the prior year quarter,” he claimed.

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