Chipotle Posts First-Ever Sales Decline

Chipotle Mexican Grill Inc. on Tuesday reported a decline in quarterly revenue for the first time in its history as a public company, as a string of illness outbreaks linked to its restaurants contributed to a 44% drop in fourth-quarter profit.

Chipotle also said it was served with a subpoena on Jan. 28, widening the scope of a federal probe into an outbreak of foodborne disease disclosed in January. The new subpoena requires Chipotle to produce documents related to company wide food safety dating back to January 2013. An earlier subpoena served in December only covered a Chipotle restaurant in Simi Valley, Calif.

The news comes a day after the U.S. Centers for Disease Control and Prevention said that two E. coli outbreaks that sickened 60 customers appeared to be over. Federal investigators said they couldn't identify a contaminated food or ingredient responsible for the illnesses, which occurred late last year in 14 states.

Sales at Chipotle restaurants and the company's stock price have been sliding since the first E. coli cases appeared in late October. The company, long known for the freshness and quality of its ingredients, also has been hobbled by salmonella cases in Minnesota in August that sickened 64, and outbreaks of norovirus linked to Chipotles in California and Boston that affected hundreds.

Steve Ells, the company's co-chief executive, described the fourth quarter as "the most challenging period in Chipotle's history."

Chipotle said revenue fell 6.8% to $997.5 million, narrowly missing the $1 billion analysts polled by Thomson Reuters had forecast. It is the company's first decline in quarterly sales since going public in 2006—it had seen double-digit overall sales growth in every quarter from its IPO until the latest quarter, according to FactSet data.

Chipotle reported a profit of $67.9 million, or $2.17 a share, down from $121.2 million, or $3.84 a share, a year earlier.

Earlier this month, Chipotle said it was expecting $1.70 to $1.90 a share in earnings, well below the $2.45 to $2.85 a share it had forecast in early December.

Same-restaurant sales, a key metric that excludes newly opened or closed restaurants, fell 14.6%.

Shares, down 0.5% after hours to $473.40, have declined 24% in the past three months.

Write to Chelsey Dulaney at [e-mail]

(END) Dow Jones Newswires

February 02, 2016 17:15 ET (22:15 GMT)

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