In what amounted to a mixed Q4, Wingstop (WING 26.30, -0.35 -1.31%) shares are likely down today as FY17 guidance came in below market expectations and indications on the call were that quarter-to-date comparable sales were -2.6% compared to last year.
In all, Q4 revenues were up 20.3% versus a year ago to $24.8 million. Earnings per share (EPS) were in-line with market expectations at $0.15, and domestic same store sales were up 1.0% on a system wide restaurant count which increased 18.1% to 998 locations.
The company also highlighted the general challenging environment for restaurants at the end of 2016, stating that it was not immune to such fluctuations s Q4 same store sales were below their expectations at the aforementioned 1% growth. However, WING noted there was a noticeable change in growth immediately after the election, which continued through the year and into the start of 2017.
Management also progressed well on their strategic priorities. One of which, unit development, showed strong progress in 2016 as well as in Q4. Wingstop just recently surpassed the 1000 restaurant mark, as 76 international locations in countries like Mexico, Singapore and the Philippines have aided growth.
Also a point of emphasis, WING expanded their digital channel as online orders posted a $4 higher average check than all other orders and variance continues to have a positive impact on sales growth. In Q4, digital sales were 19.7% of total sales, up from 17.7% in Q3.
Lastly, WING also launched a national advertising campaign in January. The company noted the campaign is driving local co-op advertising and providing the company with more region frequency in existing media markets.
Looking ahead, management highlighted that frequency has been reduced as guests become more cautious with their disposable income. The company called attention to a slow start to domestic same store sales, -2.6% YTD, but reiterated that the national ad campaign and continued progress in their technology initiatives should allow the company to deliver on another year of positive same store sales growth.
Additionally, WING gave tepid FY17 guidance of EPS growth of 8-10% to about $0.63-0.64. Also, the company sees low single digit domestic same store sales growth for the year, on 13-15% system wide unit growth with adjusted EBITDA growth of 13-15%.
The stock made nearly 10-month lows as of this morning, compounding the nearly -12.3% start to 2017. Shares have rebounded nicely off lows this morning, though, as buyers have stepped in to avoid any serious losses.