Buffalo Wild Wings' proxy battle may be over, but nearly two months later the company is still fighting to convince investors that it can forge a successful turnaround.
A weaker-than-expected earnings report and a lower forecast for this year caused shares of the company to plummet in trading Thursday, with the stock recently down about 10 percent.
The chicken wing chain's miss was sizable. The company posted adjusted earnings of 66 cents per share on $500 million in revenue, while analysts had forecast that the company would report earnings of $1.05 per share on $513 million in revenue.
In addition, Buffalo Wild Wings saw same-store sales of its company-owned restaurants fall 1.2 percent and same-store sales at franchised locations drop 2.1 percent in the quarter. The company was expected to see flat same-store sales in its company-owned stores and growth of about 0.1 percent in its franchised locations.
CEO Sally Smith blamed "historically high" chicken wing prices and a shake-up of the company's menu promotions for the weaker-than-expect sales. Smith said in June that she will resign from her post by the end of the year.
"As traditional chicken wing costs remain at historically high levels, we're adapting our value day on Tuesday to feature our boneless wings at company-owned restaurants," Smith said in a statement Wednesday. "Due to our disappointing second-quarter earnings and an outlook for slowing traffic as we manage through the Tuesday promotional change, we are lowering our 2017 earnings outlook.
Buffalo Wild Wings also slashed its 2017 outlook. Net income is expected to be between $4.00 and $4.50 per share, down from prior exceptions of $5.20 to $5.50 per share.
On an adjusted basis, the company said it will earn $4.50 to $5.00 a share this fiscal year. Previously, the company forecast adjusted earnings of $5.45 to $5.90 per share for the year.
In addition, the company said it now expects its same-store sales to be down about 1 percent to 2 percent for the year. Last quarter, Buffalo Wild Wings said that same-store sales would be up 1 percent.
Smith was "optimistic" about the company's plans to transition to boneless wings, which she said will provide a "more stable promotional platform for the future."
The company said that traditional wings account for about 31 percent of Buffalo Wild Wings costs, while boneless wings are about 13 percent. Both types of wings bring in nearly identical revenue for the company, although customers have begun to favor boneless wings, COO James Schmidt said.
Buffalo Wild Wings is testing promotions for the boneless wings in several markets in an effort to boost its margins.
The company said that traditional wing prices were $2.05 per pound, up 6 percent from last year, and forecasts that prices will rise to $2.13 per pound for the rest of the year.
"We believe Buffalo Wild Wings results this quarter once again demonstrate the challenges of a mature casual dining brand as it transitions away from a growth concept," Peter Saleh, analyst at BTIG, wrote in a research note Thursday. "While we are encouraged by some of the previously announced cost savings efforts, we continue to be confounded by the magnitude of downward pressure on earnings the promotional strategy and other factors have caused."
"While optimistic about the brand's longer-term prospects, we hesitate to assume the path to achieving better financial performance will be straightforward amid a choppy casual dining backdrop," David Tarantino, a Baird analyst, wrote in a research note Wednesday. "As such, even though we consider Buffalo Wild Wings an interesting value for patient investors at prospective levels, we prefer to wait for signs of better fundamentals before adopting a more constructive near-term investment recommendation."
Tarantino lowered his earnings estimate to $4.55 per share and revised his price target to $127, down from $140.