What happened?
Shares of Zoe's Kitchen Inc. (ZOES +0.00%), a fast-casual restaurant that serves a distinct menu of fresh, Mediterranean-inspired dishes, plunged 16.2% as of 12:02 p.m. EDT Friday, after the company released its first-quarter 2017 results. Was the quarter that bad?
So what?
During its fiscal Q1, which ended April 17, the company's total revenue increased 12.6% to $90.6 million. But that growth wasn't good enough to match analysts' estimates, which called for revenue of $92.55 million. The chain's bottom line met meager expectations of a $0.01 adjusted earnings per share. Income from operations declined by nearly 40%, down to $1.7 million, and comparable-restaurant sales decreased 3.3%. All in all, it wasn't a great quarter, and it continues the decline Zoe's investors have witnessed over the past year.
Now what?
Unfortunately, that wasn't the only bad news. Management also lowered its full-year guidance on multiple metrics. It now expects total revenue of between $314 million and $322 million, down from its previous forecast range of $325 million to $327 million. It anticipates comparable-store sales in the range of flat to down 3%, compared to its prior estimate of growth between 1% to 2%.
Image source: Getty Images.
Despite the lowered guidance, President and CEO Kevin Miles tried to put an upbeat spin on the rest of 2017. "As we look to the balance of the year, we are on track to implement several major initiatives to build sales and traffic, and to reinforce our core strategies," he said. "Later this summer, we will introduce new entrées, sandwiches and appetizers that feature bold new flavor profiles, proteins, sauces and ingredients designed to extend our leadership in the Mediterranean space."
But if Q1 made anything clear, it is that the company will have to execute on its growth initiatives and find ways to increase margins if it's going to bounce back in the face of traffic headwinds. Still, despite a rough 12 months from the fast-casual concept, it's far too early in the game for long-term investors to give up on Zoe's Kitchen.
