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Chipotle Expects to Post a Big First-Quarter Loss

The company is hurting

Scott Eisen/Getty Images

Fallen burrito giant Chipotle has been reeling from several public health crises, lawsuits, and a criminal investigation, all of which have taken a big toll on the company's earnings. Chipotle expects to post a loss of $1 a share or more for the first quarter of fiscal year 2016.

In a Tuesday SEC filing, the company reported same-store sales fell 26 percent in February, which was worse than analysts' expectations. This follows a dismal fourth-quarter 2015 earnings report that saw Chipotle drop in sales for the first time ever as a publicly traded company. In the Tuesday filing, Chipotle indicated its recovery from a bad 2015 isn't going to be cheap.

"During the quarter, we will incur higher expenses driven by increased marketing and promotions spend in other operating costs, which are anticipated to be significantly higher in the first half of 2016 compared to historic reporting periods," the filing reads. "We also anticipate higher food costs due to additional food safety protocols put into place. ... We have also incurred higher labor costs to ensure we were fully staffed as customers redeemed their free burrito offer."

Tuesday's filing revealed the hiring of an "executive director of food safety" at Chipotle. Dr. James Marsden "is actively working to further our food safety efforts and continue the progress we have already made towards establishing Chipotle as a leader in food safety." Marsden previously served as distinguished professor of food safety and security at Kansas State University's Animal Science and Industry Department.

Chipotle's stock closed at 502.82 on Tuesday, but when word of the impending numbers reached Wall Street, after-hours trading sent CMG plunging. It dipped as low as 480.02, down nearly 6 percent from the session high of 510.99.

Chipotle Stock March 15

Chipotle has taken a beating on Wall Street since closing at nearly an all-time high of 750.42 on October 13, 2015. At its lowest point in recent months, the stock closed at 404.26 on January 12.

The chain appeared to be on the road to recovery earlier this year, but disaster struck again last week when a Massachusetts location was temporarily shuttered over norovirus concerns. There were no customer illnesses reported, and the restaurant reopened two days later. But, the incident, which occurred less than 30 miles from a Boston location hit hard by norovirus in December, again cast doubt on Chipotle.

In addition to the Boston norovirus case, Chipotle was linked to E. coli nationwidesalmonella in Minnesota, and more norovirus in California last year. The latter case resulted in a U.S. Justice Department investigation into whether the chain attempted to cover up the outbreak.

In conjunction with Chipotle's low fourth-quarter numbers, co-chief executive officers Steve Ells and Marty Moran had their 2015 salaries chopped nearly in half. Ells took home $13.8 million in 2015, while Moran earned $13.6 million. By comparison, in 2014 the executives earned $28.9 million and $28.2 million, respectively.

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