Shake Shack Swings to Better-Than-Expected Quarter
May 12 2016 - 5:50PM
Dow Jones News
Shake Shack Inc. on Thursday swung to a better-than-expected
profit for its first quarter, boosted by strong same-store sales
and new location openings, leading the chain to raise its annual
guidance.
Same-store sales, which the company counts as locations opened
for 24 months or longer, climbed 9.9%, well above the 4.5%
predicted by analysts polled by FactSet. For the latest quarter,
the number of same-store locations increased to 20 from 13 a year
ago. The chain also opened three domestic storefronts.
On the heels of the latest results, Shake Shack said it expects
total revenue for the year of between $245 million and $249
million, up from its previous forecast of $237 million to $242
million. It upped its same-store sales growth forecast to between
4% and 5%, up from 2.5% to 3.0%. The company also now expects 16
new domestic locations, up from 13.
"The recent launch of the Chick'n Shack at all domestic
company-operated locations has driven traffic growth," said Randy
Garutti, CEO of Shake Shack.
Shake Shack once stirred lofty expectations and was seemingly
destined to revolutionize the burger experience. But Shake Shack's
shares have lost more than 60% of their value since peaking above
$90 a year ago.
Shares of the chain rose 5.1% to $35.95 after hours following
the earnings report.
Shake Shack's stock tumble came amid expensive plans for rapid
advancement. Catering to both fast-food and fast-casual dining
consumers, Shake Shack has a tall order to keep its sales momentum
going in new locations.
Additionally, the emerging resurgence of McDonald's, revived by
its all-day breakfast and improved operations and customer service,
has helped cool Shake Shack's fortunes.
In the quarter ended March 30, the company reported profit of
$1.5 million, or 7 cents a share, compared with a year-earlier loss
of $12.7 million, or $1.06 a share. Excluding certain items,
earnings rose to 8 cents from 4 cents.
Revenue jumped 43.3% $54.2 million from $37.8 million.
Analysts polled by Thomson Reuters forecast adjusted earnings of
5 cents a share on revenue of $52 million.
Write to Ezequiel Minaya at ezequiel.minaya@wsj.com
(END) Dow Jones Newswires
May 12, 2016 17:35 ET (21:35 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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