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Chipotle Mexican Grill Q4 sales decreased 4.8%

Chipotle Mexican Grill
Food and business   The company incurred higher expenses

Chipotle Mexican Grill provided preliminary financial and operating results for the fourth quarter 2016.

Comparable restaurant sales for the quarter decreased 4.8%, which includes the benefit of 0.5% related to previously deferred revenue that was recognized in the fourth quarter.

Comparable restaurant sales decreased 20.2% in October 2016, decreased 1.4% in November 2016, and increased 14.7% in December 2016.

"Our sales comparisons are lapping an easier compare due to lower sales levels in November and December 2015.

"We anticipate our restaurant-level operating margin for the fourth quarter 2016 to be in the 13% to 14% range. And we also expect pre-tax operating income of approximately $30 million to $32 million.

"During the quarter we incurred higher expenses compared to our originally-forecasted amounts in other operating costs, driven by increased promotional spend and costs related to testing television advertising.

"Our marketing and promotional expenses during the quarter totaled approximately 4.7% of sales. We also incurred higher food costs compared to our originally-forecasted amounts as a result of increased market costs for avocados.

"We anticipate reporting diluted earnings per share of $0.50 to $0.58 per share. Final year-end accounting adjustments and related tax expenses may impact these estimates.

"We anticipate a higher annual effective tax rate for the full year 2016 of 39% to 45% due to higher state tax rates, not qualifying for the federal R&D tax credits in 2016, and non-deductible items on overall lower pre-tax operating income.

"The increase in our full year estimated tax rate has a magnified effect on our tax rate in the fourth quarter. We expect the 2017 effective tax rate to be lower than the 2016 effective tax rate," the company said.


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