Potbelly Shares Fall to Record Low on Sales Slump

(Bloomberg) -- Potbelly Corp. shares fell to a record low after first-quarter comparable sales missed estimates and the company cut its forecast for the year.

Analysts said adverse weather, the federal government shutdown and advertising delays weighed on results for the sandwich-chain operator. Maxim downgraded the stock to hold from buy, saying a 4.7 percent decline in comparable sales for the quarter was “far worse than expectations.”

The shares fell as much as 22 percent in New York, their biggest decline in almost five years.

Here’s what Wall Street is saying:

William Blair, Sharon Zackfia

Weak sales trends in the quarter were caused in part by a decision to postpone advertising until later in the year, partially due to bad weather. Curtailed spending was unable to offset weaker same-store sales and margins. April’s comparable sales were little changed from the first quarter.

Potbelly’s reduced comparable sales view still implies an improvement in coming quarters.

Rates market perform

Maxim Group, Stephen Anderson

Maxim cut its rating to hold from buy, saying “we now expect any comp rebound to take place over an extended period, while any refranchising effort is likely to be postponed.”

Price target reduced to $8 from $11

Piper Jaffray, Nicole Miller Regan

“Turnaround efforts remain a multi-year opportunity as supported by operational (culinary innovation, improved marketing) and strategic initiatives (share repurchase, recent human capital hires, potential re-franchising).”

Piper said the comparable sales decline was in-line with its expectations but below the average analyst estimate.

Rates overweight, cuts price target to $10 from $14

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