Shares Down as Shake Shack Posts Softer Same-Restaurant Sales Growth
August 10 2016 - 6:00PM
Dow Jones News
Shake Shack Inc's same-store sales growth decelerated in the
second quarter, as the restaurant sector continues to show signs of
weakening.
Same-store sales, which the company defines as a location opened
for 24 months or longer, climbed 4.5%, weaker than the 4.8%
predicted by analysts surveyed by FactSet. The mark was also less
than the 12.9% growth posted during the same period last year and
the surprise 9.9% increased registered in the prior quarter.
Shares of Shake shack, down 42% over the past 12 months, fell 9%
to $37.38 after hours.
Restaurant operators have been facing an increasingly
challenging environment. According to market research from NPD
Group Inc., trips to fast-food chains have been mostly flat through
June as consumers look to make eating out among their first
spending cuts amid uncertain economic times.
People are spending less eating out, a trend that prompted one
analyst recently to say the economy is mired in a "restaurant
recession." Fast-food chains such as McDonald's Corp. and
Restaurant Brands International Inc., owner of Burger King, have
already fallen victim following disappointing quarterly results of
their own.
The company posted a 37% jump in sales for the three-month
period ended in June, leading it to revise its annual guidance for
revenue to a range of $253 million to $256 million, up from $245
million to $249 million previously. Analysts surveyed by Thomson
Reuters expect annual revenue of $252 million.
The revenue growth for the latest quarter was due to the opening
of new locations and same-store sales growth. Seven system-wide
Shack locations were opened during the quarter.
The company also upped its estimates for new store openings this
year to 18 from 16.
Average weekly sales for domestic company-operated storefronts
remained unchanged at $102,000 for the latest quarter.
Overall in the quarter ended in June, the company reported
profit of $3.3 million, or 14 cents a share, compared with a
year-earlier profit of $1.1 million, or 8 cents a share. Excluding
certain items, adjusted earnings on a pro forma basis rose to 14
cents from 9 cents.
Revenue jumped 37% to $66.5 million.
Analysts polled by Thomson Reuters forecast adjusted earnings of
13 cents a share on revenue of $63 million.
Write to Ezequiel Minaya at ezequiel.minaya@wsj.com
(END) Dow Jones Newswires
August 10, 2016 17:45 ET (21:45 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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