Reuters: Global Markets: Chipotle shares drop on weak forecast as food costs jump

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Chipotle shares drop on weak forecast as food costs jump Jan 16th 2013, 14:58 Wed Jan 16, 2013 9:58am EST (Reuters) - Shares of Chipotle Mexican Grill Inc (CMG.N) fell more than 7 percent on Wednesday after the burrito chain warned that food costs rose more than expected in the fourth quarter, leading it to forecast earnings below market expectations. The warning was the latest blow for Chipotle, which in the fall said restaurant sales would cool in 2013. In October, influential hedge fund manager David Einhorn called the chain's stock an attractive "short," saying Chipotle will face significant competition and additional costs. Shares of Chipotle, once an investor darling due to its fast growth, fell $21.54 to $275.78 in early New York Stock Exchange Trading. The stock traded at $442.40 in April. The company said it expects to report food costs at 33.5 percent of sales in the fourth quarter, up from 32.2 percent in the year-ago quarter. Mark Kalinowski, analyst at Janney Capital Markets, forecast 32.7 percent. The company also said that marketing and promotional costs were up from the third quarter. Fourth-quarter earnings will be in the range of $1.92 to $1.97 a share, the company said. Analysts on average had forecast $2.09 a share, according to Thomson Reuters I/B/E/S. Revenue is expected to increase 17.2 percent to $699.2 million, the company said. Analysts on average forecast $693.4 million. Sales at restaurants open 13 months rose 3.8 percent, the company said. that is down from the 4.8 percent increase in the third quarter. (Reporting By Brad Dorfman; Editing by Nick Zieminski) Link this Share this Digg this Email Reprints

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