Portillo’s ( NASDAQ: PTLO ) shares fell sharply on Thursday after the company posted a mixed earnings release, impacted significantly by inflationary pressures.
While the company’s second quarter EPS comfortably beat estimates, revenue narrowly missed expectations. Additionally, adjusted EBITDA margin fell 510 basis points from the prior year while operating income fell nearly 30% in the same span.
“During the quarter and two quarters ended June 26, 2022, we experienced unprecedented commodity inflation, with the largest increases in pork, chicken and beef prices,” the company explained. “Additionally, we experienced higher labor expenses during the second quarter and two quarters ended June 26, 2022 compared to the same periods last year primarily due to additional wage investments made in June 2021.”
The impacts of both labor and commodity costs are expected to persist throughout the year, “in the range of 13% to 15%” and more than offset price increases that ranged between 1.5% and 3.5%.
Portillo’s ( PTLO ) shares slid 7.49% in premarket trading on Thursday.
Nonetheless, management remained optimistic on the ability to navigate these headwinds moving forward.
“Our second quarter results demonstrated the consistency and durability of our brand,” CEO Michael Osanloo said, “ We remain hyperfocused on team member engagement, our value proposition and our overall guest experience. This, in turn, drove solid top line and bottom-line results that are in-line with our long-term targets.”
Read more on the company’s forecasts .
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Portillo’s shares plunge as ‘unprecedented inflation’ impacts earnings