Red Robin's Profit Drops

Earnings still top the burger chain's lowered expectations.
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Red Robin Gourmet Burger's

(RRGB) - Get Report

fourth-quarter profit dropped slightly as higher costs burned results, but the burger chain managed to top its lowered expectations for the period.

The company's earnings for the quarter ended Dec. 25 fell to $5.5 million, or 33 cents a share, from $5.7 million, or 34 cents a share, a year earlier. Revenue rose to $116.5 million from $97.6 million, as same-store sales rose 2.7% at company restaurants.

Red Robin shares were scorched last month after the company slashed its fourth-quarter earnings projection, saying same-store sales were weaker than expected. At the time, the company estimated earnings of 29 cents to 32 cents a share, well below its earlier expectation of 40 cents to 41 cents, with revenue of about $116.5 million.

Analysts' most recent forecasts called for earnings of 30 cents a share and sales of $116.8 million, according to Thomson First Call.

The Greenwood Village, Colo.-based company said Thursday that its restaurant operating profit margin fell to 20.6% from 21.8% a year earlier due to higher labor and overall operating expenses. This was partially offset by a lower cost of sales, the company said.

Red Robin offered in-line earnings guidance for 2006, projecting earnings of $1.72 to $1.82 a share, including about 18 cents in options costs. Analysts, on average, expect earnings of $1.75 a share, including options. The company sees full-year revenue of $590 million to $598 million, with same-store sales growth of 2.5% to 3.5%. Wall Street targets revenue of $599.4 million.

For the first quarter, the chain predicts earnings of 41 cents to 45 cents a share and revenue of $169 million to $171 million. Analysts forecast earnings of 44 cents a share and revenue of $171.9 million.

Red Robin shares were up $2.30, or 5.9%, to $41.38, in after-hours trading.