Chipotle Stock Increases After Sales Improve

Chipotle stock was up 5% Tuesday after the maker of burritos posted a drop in sales at same-stores that was less for the fourth quarter than had been anticipated.

Chipotle’s sales at its established restaurants were down 4.8% during the final quarter of 2016 thanks in part to an increase during November and December.

Following a drop of 20% during October, comparable sales were up the last two months of 2016, as the burrito chain faced more favorable comparisons to the prior year period.

Sales at same stores at Chipotle were down 1.4% during November and were up 14.7% for December.

An E.coli outbreak that was highly publicized sent the results for the company into a tailspin beginning in October of 2015. Since that time, stock in the company has lost about 50% of its value.

Chipotle told investors previously that its comparable sales would drop during the final quarter of 2016 in the low single digits.

The chain of burrito restaurants reported sales and a forecast for earnings for the quarter that fell short of expectations on Wall Street.

During its quarter, Chipotle’s sales overall were $1.04 billion compared to $997.4 million for the same period one year ago. However, that failed to reach Wall Street’s predictions of $1.05 billion.

The company was hurt by expenses that were higher than had been expected during the final quarter because of more spending on advertising and promotions. It also had higher costs of food due to an increase in the price of avocados.

Chipotle is expecting earnings per share of between 50 cents and 58 cents, which is far below the estimate on Wall Street of 96 cents.

One industry analyst said that promotional spending and costs for advertising will remain as issues for Chipotle during 2017. He dropped estimates for the full year of 2017 as well as 2018 by 60 cents apiece.

Chipotle continued to battle to move forward from a series of foodborne illness outbreaks that became high profile despite its latest promotions and advertising, including a loyalty program of three months known as Chiptopia.

Those efforts have helped to swing the business back to being profitable but still shy of expectations of analysts.

Investors are hoping that a shakeup in the board at Chipotle will help jumpstart its turnaround. Last month, the company named four new board members.

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