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Chipotle Summer Channel Checks Show Growth

Chipotle Summer Channel Checks Show Growth
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Channel checks indicate a sequential improvement in traffic at Chipotle Mexican Grill, Inc. (NYSE: CMG) in June, BTIG’s Peter Saleh said in a report. He maintained a Neutral rating on the company, adding that July appears to be consistent with June.

Although Chipotle’s new initiatives, such as the launch of chorizo and the limited-time loyalty program Chiptopia, could boost same-store sales in the back half of the year, sales recovery is expected to be gradual, Saleh mentioned.

Related Link: Morgan Stanley Downgrades Chipotle, Says 13% Of Consumers Won't Go Back Anytime Soon

Traffic In June And July

Channel checks at one of New York’s Chipotle locations suggested that traffic improved by ~9 percent sequentially in June, representing the strongest month of the year, Saleh stated. He added that the performance during the second half of June was significantly better than that in the first half. May channel checks had already suggested a 3-5 percent improvement in traffic versus April.

Traffic trends so far in July had been consistent with June, with no visible improvement due to the launch of chorizo and Chiptopia, the analyst noted. He further said that chorizo could likely drive a 4-5 percent increase in traffic once it is available nationally.

“We believe Chipotle experienced its seasonal spring sales lift (6%-7%) in June this year, two months later than usual. We are prudently modeling 2Q16 comps to be down (20.0%), implying a traffic decline of ~(15%) in the quarter, but are optimistic for some modest outperformance,” Saleh wrote.

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Latest Ratings for CMG

Jul 2017ArgusDowngradesBuyHold
Jul 2017BarclaysMaintainsEqual-Weight
Jul 2017BMO CapitalDowngradesOutperformMarket Perform

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