Red Robin Profit Misses Estimate; Stock Tanks - Update

(RTTNews) - Red Robin Gourmet Burgers Inc (RRGB) Thursday reported a steeper-than-expected decline in second-quarter profit, hurt mainly by higher food, beverage and occupancy costs. Sales for the quarter climbed from a year ago, but fell short of expectations.

Investors reacted negatively to the results, sending Red Robin shares plunging 21 percent in morning trade on the Nasdaq.

CEO Steve Carley said the casual dining restaurant chain's marketing efforts failed to deliver the desired results in a highly competitive market.

"Going forward, we remain cautious in the near term but are confident that initiatives we have in place will generate meaningful long-term value," Carley said.

Red Robin, based in Greenwood Village, Colorado posted quarterly net earnings of $9.5 million or $0.65 per share, compared with $11.1 million or $0.77 per share a year ago.

Excluding items, adjusted earnings for the quarter were $0.68 per share. On average, 12 analysts polled by Thomson Reuters expected earnings of $0.90 per share for the quarter. Analysts' estimates typically exclude special items.

Revenue for the second quarter climbed 7.5 percent to $256 million from $238 million a year ago, but missed analysts' expectations of $263.4 million.

Comparable restaurant sales for the quarter was up 1.2 percent.

Results were mainly offset by operating expenses that climbed to $242.7 million from $222.9 million in the prior year. Restaurant-level operating profit margins slid 110 basis points from last year to 22.2 percent.

For the full year 2014, Red Robin expects comparable restaurant revenue growth in the low single digits.

In July, Red Robin closed the acquisition of 32 franchised restaurants in the U.S. and Canada for about $40 million.

Red Robin stock is trading at $50.93, down $13.62 or 21.10%, on a volume of 2.3 million shares on the Nasdaq.