Chipotle reports first quarterly results since food scare

On Monday, the U.S. Centers for Disease Control and Prevention (CDC) said the outbreak appears to be over. “We are pleased to have this behind us and can place our full energies to implementing our enhanced food safety plan that will establish Chipotle as an industry leader in food safety”, said CEO Steve Ells. That’s the first sales drop since the company went public a decade ago. The company, long known for the freshness and quality of its ingredients, also has been hobbled by salmonella cases in Minnesota in August that sickened 64, and outbreaks of norovirus linked to Chipotles in California and Boston that affected hundreds. The company announced it was now subject to a broader criminal investigation by the U.S. Department of Justice that is subpoenaing company-wide food safety documents dating back to January 2013.

This just adds insult to injury as the burrito chain also gave a dim view of 2016 in its latest earnings report, saying it would be a “very hard year”. Chipotle didn’t offer specific financial guidance for the new year but said it will spend another $300 million buying back its stock.

“While January trends were disheartening, we believe the CDC “closure” and the company’s promotional efforts will ultimately help Chipotle rebuild trust with its core customer”, wrote RBC Capital Markets analysts in a note on Wednesday. Chipotle Mexican Grill fell sharply as the company disclosed a federal investigation into its E. coli outbreak, and Yahoo sank as the troubled Internet company announced layoffs and plans to sell businesses. Sales were down 36 percent in the month, Chipotle said on Tuesday. “Over the past few months, we have taken significant steps to improve the safety of all of the food we serve, and we are confident that the changes we have made mean that every item on our menu is delicious and safe”, Chipotle spokesman Chris Arnold said in a statement via CNBC News. Profits fell 44% to $67.9 million, or $2.17 per share, missing the $2.32 per share FactSet estimate. The company released today its first earnings report since its E. coli outbreak, revealing a mixed, but mostly bad, set of numbers.

If you’ve noticed shorter lines at Chipotle following several pathogen outbreaks that sickened some 350 people, it’s not your imagination.

The company is already being investigated by federal authorities over the foodborne illnesses tied to the restaurants.

Chipotle shares have fallen roughly 1 percent since the beginning of the year, while the Standard & Poor’s 500 index has decreased roughly 7 percent.

At least eight brokerages including Goldman Sachs and Barclays cut their price targets on the stock after Chipotle reported results.