Buffalo Wild Wings Inc.'s shares fell Tuesday after the restaurant chain reported a 10 percent drop in first-quarter profit due to higher costs.
THE SPARK: The Minneapolis-based restaurant chain said Monday that it earned $16.4 million, or 87 cents per share, for the quarter. That compares with $18.2 million, or 98 cents per share, in the year-ago period. Revenue rose 21 percent to $304.4 million.
Analysts expected 99 cents per share on revenue of $303.9 million, according to FactSet.
THE BIG PICTURE: The restaurant chain said higher chicken wing prices and added expenses for testing new technology were major challenges in the quarter.
Buffalo Wild Wings Wing said costs are trending down, which should ease pressure on its margins.
THE ANALYSIS: A number of analysts lowered their ratings on Buffalo Wild Wings, including Sterne Agee's Lynne Collier.
She downgraded the company to "Neutral" from "Buy," noting that while she was pleased with sales trends, profit still fell short of her expectations. The analyst also noted that despite lower year-over-year wing costs, the flow-through to earnings over the next few quarters will be less than originally anticipated.
SHARE ACTION: Shares fell $4.32, or 4.6 percent, to $90.01 in afternoon trading. The stock has traded between $68.71 and $96.15 over the last 52 weeks.