* Sales at established restaurants cool throughout quarter
* Second-quarter profit forecast below Street view
* Shares drop 10 percent in afternoon trading
(Adds executive comment, forecasts, byline; updates shares)
By Lisa Baertlein
Oct 24 Chili's Grill & Bar parent Brinker
International Inc on Wednesday said a cool-down in sales
at established restaurants was stretching into the current
quarter, sending its shares down more than 10 percent.
The Dallas-based company, which also owns the Maggiano's
Little Italy chain, also reported a fiscal first-quarter profit
that just missed Wall Street's estimate and issued a
second-quarter earnings forecast below analysts' target.
Brinker's results came just days after industry leaders
McDonald's Corp and Chipotle Mexican Grill Inc
turned in disappointing results and dragged down the restaurant
"Late in the first quarter and even into the current
quarter, (sales) trends softened significantly across the
category," Wyman Roberts, Chili's president said on a conference
call with analysts.
Brinker's net income rose 18 percent to $27.9 million, or 36
cents per share, for the fiscal first quarter that ended Sept.
Excluding a gain related to royalty revenues, the company
earned 37 cents per share, missing Wall Street's average
estimate by a penny, according to Thomson Reuters I/B/E/S.
Restaurant operating margins improved by about 150 basis
points to 14.6 percent from 13.1 percent a year earlier, helped
by projects that have streamlined staffing and upgraded kitchen
and point of sale systems.
Revenue rose just more than 2 percent to $683.5 million.
Sales at restaurants open at least 18 months rose 2.8
percent at Chili's and 0.9 percent at Maggiano's during the
quarter. Analysts polled by Consensus Metrix were looking for a
2.3 percent rise at Chili's and a gain of 2.4 percent at
"Overall employment growth continues to be sluggish,
resulting in a persistently cautious consumer," Brinker Chief
Financial Officer Guy Constant said on the analyst call.
Such pressure would likely cause the company's
same-restaurant sales growth to be "at or even below the low end
of our 2 to 3 percent guidance," Constant said.
As a result, he forecast second-quarter earnings of 48 cents
to 50 cents per share. That is far below analysts' average
estimate of 55 cents per share, according to Thomson Reuters
Brinker's shares fell 10.5 percent to $29.92 in midday
trading on the New York Stock Exchange.
(Additional reporting by Siddharth Cavale in Bangalore; Editing
by Tim Dobbyn and Maureen Bavdek)