Despite Hurricane Impacts, Chuy’s Headed in Right Direction
Chuy’s Holdings Inc.’s stocks are up more than 8 percent heading into the lunch hour after the brand reported Thursday that despite an estimated $1.2 million loss in both sales and incremental costs associated with hurricanes Harvey and Irma, revenue grew by 7.7 percent to $92.2 million over last year’s $85.6 million for the same quarter.
Steven J. Hislop, president, CEO, and director for the Tex-Mex casual dining chain, reported in the earnings call that due to the natural disasters impacting 36 percent of stores, 44 operating days were lost. These factors contributed to a $0.03 negative impact on earnings per diluted share, which are now at $0.19.
Comparable restaurant sales decreased by 2.1 percent, which Hislop said were impacted by approximately 90 basis points due to hurricanes, 50 basis points from “strategic cannibalization” of two high-volume stores in Austin, and 60 basis points due to the timing of new stores entering the comp base.
A 3.7 decrease in traffic drove the fall in sales, but the brand also posted 1.6 percent increases in average check, offsetting the drop.
“Despite the hurricane disruption, we saw underlining sales improvements in our business during September,” Hislop said. “I'm also pleased to note that, while it's still early, comparable restaurant sales through October are running slightly positive. So while we're not quite where we want to be, our underlying trends appear to be improved.”
Chuy’s Holdings is lowering annul diluted net income per share guidance to $0.96—$1 from its previous range of $1.04—$1.08. The brand’s expected comparable restaurant sales growth is now expected to hit negative 1.5 percent.
The chain also announced that its board of directors approved an initiative for a $30 million share repurchase program that will run until the end of 2019.
“We believe this authorization is indicative of the confidence we have in our core business, our ability to continue growing the Chuy's brand and our commitment to enhancing long-term returns for our shareholders,” Hislop said.
Two new stores were opened in the third quarter. One Texas store was scheduled for a third quarter opening but was delayed due to Harvey’s impact in the area. Two more stores are scheduled to open in 2017, bringing the yearly total to 11. Another Texas store that has been closed since August 26 due to Hurricane Harvey will also reopen this year. One Miami store scheduled to open in Q4 will be delayed until early 2018 due to Hurricane Irma.
Chuy’s also plans to explore catering after expanding the test initiative from the Nashville market to also include Dallas and Houston. If the test is successful, Chuy’s will expand catering program to additional markets in 2018. Additionally, the brand has announced that its new online ordering project will roll out to stores at the end of the second quarter in 2018.