Please ensure Javascript is enabled for purposes of website accessibility

Why Potbelly Corp. Stock Dropped Today

By Steve Symington - May 3, 2017 at 3:52PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The sandwich maker endured tough restaurant industry conditions to start 2017.

What happened

Shares of Potbelly Corporation (PBPB -1.12%) slumped after the quick-service sandwich specialist announced disappointing first-quarter 2017 results.

So what

Quarterly revenue climbed 6% year over year, to $101.7 million, as contributions from new locations more than offset a 3.1% decline in company-operated comparable-store sales. On the bottom line, that translated to 16.7% growth in adjusted net income, to $1.3 million, and 25% growth in adjusted earnings per diluted share, to $0.05. Analysts, on average, were looking for roughly the same per-share earnings on revenue of $103.4 million.

The storefront for a Potbelly sandwich shop


"The operating environment remained highly challenging for restaurants, and our business performance was reflective of these negative traffic trends experienced throughout most of the industry," elaborated Potbelly Chairman and CEO Aylwin Lewis. "Our comparable store sales decline of 3.1% fell short of our expectations, as traffic at the end of 2016 continued to decline into 2017."

Now what

For the full year, Potbelly now expects a low-single-digit drop in company-operated comparable-store sales (versus guidance for flat comps previously) and adjusted net income of $9.0 million to $10.0 million, equating to adjusted per-share earnings of $0.35 to $0.38 (down from $0.45 to $0.47 previously). Underlying this outlook is a combination of Potbelly's year-to-date traffic trends and the previously announced impending closure of its Chicago Midway Airport shop, the lease for which will not be extended per the proposal of a new development group hired by the airport to handle dining concessions.

In the end, from its falling comps to its guidance reduction, there's no denying this was a tough quarter for Potbelly, and it's no surprise to see shares tumbling today.

Steve Symington has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Potbelly Corporation Stock Quote
Potbelly Corporation
$5.31 (-1.12%) $0.06

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 08/07/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.