- If the marketing initiatives and free burritos are pulled in the near future, will sales be adversely affected in a big way?
- Buybacks supports earnings temporarily but investors want to see growth initiatives such as new stores and ways of re-building of its brand.
- Investors are interested due to 2017 expectations so they will be mindful of issues that could affect profitability next year.
Chipotle Mexican Grill (NYSE:CMG) announces its first quarter earnings on the 26th of this month and the question that remains topmost on investors' minds is whether the brand has been permanently damaged and if it can bounce back to levels of peer leading growth the company reported before the e-coli breakouts. One thing we know for sure is that this quarter will be horrible not just because of the estimated 30% lower sales this quarter but also because of the elevated marketing spend the fast casual chain had to embark on in order to restore its brand. Therefore the consensus EPS forecast of -$1.05 should be not that surprising when you combine the lower sales comps along with the $50 million that was invested in marketing and promotional activities. This quarter is going to be horrible but it will be the forward looking guidance that investors will be tuning in for. Many believe Chipotle will end up being a 2017 recovery story but that's still not a given at this stage. Here are some crucial areas, you should be watching out for when it reports on the 26th.