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Red Robin plunges to 52-week low after awful quarter

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Red Robin Gourmet Burgers (RRGB) was having one of the worst trading days in the stock’s history Thursday, slumping to a 52-week low after a terrible quarterly report and further putting its five-year market winning streak in doubt.

The Greenwood Village, Colo., burger chain recently was down $13.63 at $50.92. On a percentage basis, the 21.1% drop would be its fourth-largest in a session going back to 2002. Earlier in the day, it was at $50.50. Meanwhile, two hours into trading, volume was 15 times higher than average.

At this point, Red Robin’s stock has lost 30% in 2014. That’s a major turnaround for shares that haven’t had a negative year since 2008 and that last year surged 108%. However, as is the case with many restaurants that rallied in 2013 — more than 50% for a broad group Yahoo Finance tracks — the new year has been much more subdued. For stocks such as Red Robin, which peaked at $86.83 in November, it’s been downright awful.

The steep drop followed news that second-quarter revenue, while up 7.5% from last year, totaled $256.1 million, some $7 million below Wall Street’s estimate. Adjusted earnings per share were even worse. At 68 cents, that was far short of the 90-cent expectation and, according to FactSet data, was the first EPS miss since the third quarter of 2010. Higher food and beverage expenses were the primary cause, Red Robin said, though other costs climbed as well.

Same-store sales were also weak, rising 1.2%, while a 3% increase was what analysts were calling for. The gain was a result of greater customer payments, which rose 3.7%, as guest traffic, the other key factor in comparable sales, fell 2.5%. The Red Robin system had 502 stores at the end of the quarter.

For the full year, Red Robin kept its view that comparable-restaurant revenue would be up in the low single digits. However, earnings are likely to disappoint. In addition to falling short for the latest quarter, the company is now estimating slightly lower restaurant-level operating profit margins for the full year, as well as higher general and administrative costs, which would reduce earnings. Still, it also decreased its tax rate expectation, so that’s a positive for net income.

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