UPDATE 2-Buffalo Wild Wings posts higher Q1 profit, shares rise

(Adds analyst's comments, conference call details, updates share movement)

By Shivani Singh

BANGALORE, April 29 (Reuters) - Restaurant operator Buffalo Wild Wings Inc (BWLD.O) posted an 18 percent rise in quarterly earnings, helped by higher restaurant and same-store sales, sending its shares up 12 percent after the bell.

Comparable restaurant sales rose 4.1 percent at company restaurants and 2.1 percent at franchise restaurants, despite an environment of uncertain consumer spending.

Sales at company-owned restaurants grew 22.3 percent to $86.9 million during the quarter.

Results were also helped by lower-than-expected labor and operating costs, Morgan Keegan analyst Destin Tompkins said.

Labor costs rose about 23 percent to $25.9 million, while operating costs increased about 16 percent to $13.3 million during the quarter.

Average weekly sales for company-owned restaurants rose 5.6 percent to $41,438 in the first quarter, well above the 4.1 percent same-store sales, which suggests that new units continue to do well, Tompkins added.

The analyst has an "outperform" rating on the stock, which rose to $29.00 in trading after the bell. The shares closed at $25.88 Tuesday on Nasdaq.

QUARTERLY RESULTS

For the first quarter, the restaurant chain earned $6.5 million, or 36 cents a share, including a charge of 2 cents a share related to restaurant relocations. It reported a profit of $5.5 million, or 31 cents a share, a year earlier.

The company said its net income would have risen more than 30 percent after excluding pre-opening expenses, and depreciation and impairment related to relocations of three restaurants.

Pre-opening costs rose by $867,000 in the quarter. Buffalo Wild Wings also recorded depreciation and impairment of $510,000 related to the relocations.

Revenue rose 21.7 percent to $97.3 million.

Analysts on average were expecting earnings of 36 cents a share, before special items, on revenue of $96.7 million, according to Reuters Estimates.

ACQUISITIONS TO DRIVE GROWTH

The company said its acquisition of nine franchised restaurants in the Las Vegas area would close in the third quarter and add to earnings.

"We are confident that these units, combined with our unit growth and strong unit-level performance, will enable us to achieve our annual goal of increasing net income by 25 percent," CEO Sally Smith said in a statement.

Morgan Keegan's Tompkins said the company's 2008 outlook translates to earnings per share of about $1.38, which is above Wall Street estimates.

Analysts on average expect the Minneapolis-based company to post 2008 earnings of $1.32 per share, excluding special items. (Editing by Himani Sarkar)