Shares of Outback Steakhouse (OSI) fell nearly 8% Friday after the company warned after the bell Thursday that second-quarter earnings would be below analysts' estimates.
The restaurant operator said expectations by the Street had not adequately taken into account lower than expected same-store sales growth and higher commodity costs, particularly unusually high produce and dairy costs. In addition, Outback said lower average store volumes would result in slightly higher labor and general and administrative expenses.
The result, Outback said, is that quarterly income would be roughly 10% below the analyst estimate of 63 cents a share.
Following the company's announcement, Prudential lowered its rating of the company, saying it was surprised at the magnitude of the earnings miss, especially with the cost of goods guidance in line with estimates.
Outback's shares were recently down $2.55, or 6%, to $39.84.