Chefs' Warehouse Lower 2013 Earnings Outlook, Tightens Revenue Guidance

(RTTNews) - Chefs' Warehouse, Inc. (CHEF), a distributor of specialty food products, on Monday lowered its earnings outlook for fiscal year 2013 and tightened its revenue forecast range. The revised earnings outlook is below analysts' expectations. Shares of the company tumbled more than 13 percent in extended trades.

Ridgefield, Connecticut-based Chefs' Warehouse noted that the top line performance of its core business for 2013 was toward the lower end of its expectations, partly due to adverse weather in the Northeast and mid-West during the key holiday season. In addition, the company incurred a non-cash charge in the quarter at one of its subsidiaries.

For fiscal 2013, Chefs' Warehouse now forecasts earnings in a range of $0.75 to $0.76 per share, modified pro forma earnings of $0.80 to $0.81 per share, and revenue of $670.0 million to $673.0 million. Previously, the company forecast earnings of $0.84 to $0.87 per share, modified pro forma earnings of $0.88 to $0.91 per share and revenue of $660.0 million to $680.0 million.

On average, analysts polled by Thomson Reuters currently expect the company to earn $0.90 per share for the year on revenue of $671.63 million.

Christopher Pappas, Chairman and Chief Executive Officer of Chefs' Warehouse said, "Top line performance of our core business for 2013 was toward the lower end of our expectations, due in part to adverse weather in the Northeast and mid-West during the key holiday season. However, with our acquisition of Allen Brothers in December we were able to continue to execute on our strategy of growing our business through opportunistic acquisitions."

Pappas added that continued margin pressure at its Michael's Finer Meats subsidiary during the quarter and a significant charge related to an accounting issue involving that subsidiary negatively impacted its fourth-quarter results.

The company said it has determined that an employee involved in the financial reporting process at the Michael's Finer Meats subsidiary, which was acquired by the company in August 2012, deliberately made unsupported adjustments to the subsidiary's inventory balances.

This resulted in an aggregate overstatement to the subsidiary's inventory balance as of the closing date of about $427 thousand, which increased to an aggregate overstatement of about $905 thousand at September 27, 2013.

The overstatement of inventory resulted in an understatement of cost of goods sold. The company is taking a non-cash charge of about $0.02 per share in the fourth quarter of 2013 to correct those misstatements and as it believes that the impact of those adjustments was not material to its consolidated financial statements for any financial reporting period subsequent to the closing date.

Chefs' Warehouse plans to release financial results for the fourth quarter and fiscal year ended December 27, 2013 in late February.

CHEF closed Monday's trading at $27.31, down $0.02 or 0.07 percent on a volume of 115,089 shares. In after-hours, the stock further declined $3.66 or 13.40 percent to $23.65.