By Sam Boughedda
Investing.com — Brinker International Inc (NYSE:EAT) shares tumbled Wednesday after it announced preliminary earnings for the first quarter of 2022.
The parent company of Chili's shares have fallen 8.64% after its results showed higher labor and food costs affected its profit margins. First-quarter sales increased to $859.6 million compared to $728.2 million during the same quarter of fiscal 2021. Net income increased to 34 cents a share compared to 28 cents.
Revenue was as forecasted; however, net income widely missed estimates of 69 cents a share. This was attributed to the higher costs of labor and food with Brinker saying it plans to raise prices for the fiscal year with a target of 3%.
"Brinker's first quarter delivered positive sales and continued to significantly outpace the industry in traffic," said Wyman Roberts, chief executive officer.
"But the COVID surge starting in August exacerbated the industry-wide labor and commodity challenges and impacted our margins and bottom line more than we anticipated," added Roberts.
Brinker's price target was recently lowered to $58 from $63 at KeyBanc. Meanwhile, Stephens analyst James Rutherford kept his overweight rating and $68 price target despite the Q1 earnings miss but noted that it was an even wider miss than he anticipated.