The Chefs' Warehouse Inc. (CHEF) delivered a solid fourth-quarter performance on Wednesday that somehow left investors unimpressed. The specialty food distributor beat earnings expectations and reported strong sales growth, yet shares tumbled in early trading.
The company posted adjusted earnings per share of 68 cents for the quarter, comfortably clearing the Street's 63-cent estimate. Revenue hit $1.143 billion, up 10.5% from the prior year and surpassing the consensus forecast of $1.098 billion. Organic sales grew 9.7% year-over-year, suggesting genuine business momentum rather than acquisition-driven gains.
But here's where things get interesting. While the top and bottom lines impressed, operating income actually declined to $43.2 million from $46.5 million in the year-ago quarter. The culprit? A $10.5 million jump in other operating expenses that ate into profitability. Gross profit margin also slipped modestly, declining about 8 basis points to 24.2%.
On a brighter note, adjusted EBITDA climbed to $80.3 million from $68.2 million in the fourth quarter of 2024, demonstrating underlying operational strength. The company closed the quarter with $120.98 million in cash and cash equivalents on its balance sheet.
Looking Ahead to Fiscal 2026
Management reaffirmed its fiscal year 2026 sales guidance, projecting revenue between $4.35 billion and $4.45 billion. The company expects gross profit ranging from $1.053 billion to $1.076 billion, with adjusted EBITDA landing between $276 million and $286 million.
What Management Is Saying
Chairman and CEO Christopher Pappas struck an optimistic tone about market conditions and customer demand. "Business activity and demand remained consistently strong through the fourth quarter amidst a healthy environment for our core upscale-casual to higher-end dining customer base," Pappas said. "Our teams, across domestic and international markets, provided excellent product and service amidst a busy holiday season."
Pappas highlighted the company's market share gains, noting "strong year-over-year organic volume growth, unique item placements and new customer acquisition" throughout the quarter. He thanked the entire Chefs' Warehouse team for "delivering a strong 2025 for our team members, our customers and supplier partners, and our shareholders."
Despite the upbeat commentary and solid numbers, Chefs' Warehouse shares dropped 5.91% to $61.50 during premarket trading Wednesday. Sometimes the market just shrugs at good news.
