Shake Shack (SHAK) reported quarterly earnings on Thursday that were mostly in line with expectations, sending shares higher up nearly 7% in pre-market trading.
In its fourth-quarter results, Shake Shack slightly beat estimates on its top and bottom line, following preliminary, unaudited fourth-quarter 2022 results the company reported in January. Ahead of the report, investors honed in on the company’s margins, growth plans, and menu prices.
Here’s what Shake Shack reported, compared to Wall Street expectations, according to Bloomberg consensus estimates:
Revenue: $238.5 million versus $238.2 million expected
Adjusted earnings per share: -$0.06 versus -$0.11 expected
Same-Store sales: up 5.1% versus 5.16%
Earnings per share, while a loss of 6 cents, came in better than Wall Street anticipated. Company-operated locations brought in $229.9 million in revenue, while licensed locations brought in $8.6 million. During the quarter, the company posted an operating loss of $6.3 million as inflation continues. Operating profit was similar to that previously reported, $43.2 million, or 18.8% of Shack sales. Total net loss for the quarter was $11.1 million.
For the full fiscal year, the company brought in $900.5 million, up 21.7% from a year ago, while system-wide sales went up 22.7%. Same-store sales were up too, 7.8% higher compared to 2021. Operating loss for the total year was $26.9 million.
In 2022, the company opened 36 U.S. locations, in addition to 33 new licensed shacks and four new markets in China as it bets big on its licensed business development strategy in Asia.
After falling more than 40% in 2022, Shake Shack shares have gained more than 40% so far this year.
Upon reporting preliminary fourth-quarter results and its 2023 outlook at the ICR conference, Shake Shack also unveiled major plans for more locations, discussed the success of its different formats like its drive-thru concept, and weighed in on the impact of inflation.
For the full year 2023, Shake Shack expects to open nearly 40 U.S. locations and 25 to 30 licensed locations.
Shake Shack CEO Randy Garutti said last month the company plans to open “probably 10 to 15 more drive-thrus” in 2023. Currently, the company operates 11 drive-thru locations, nine of which opened last year.
Each drive-thru location should generate more than $4 million in annual sales, the company said. That’s compared to $3.8 million at traditional company-owned stores. Operating profit margins should be on par or better than the company average, Shake Shack said.
For the first quarter of 2023, the company said it expects total revenue to come in between $234.5 and $243 million and same-store sales to be in the mid- to high-single digits with operating profit margins around 16% to 18%.
Same-store sales guidance could get a boost for the first quarter of 2023, according to Nick Setyan, an analyst at Wedbush, who has a price target of $55 and Neutral rating on the stock. Setyan said “favorable weather and the year-over-year Omicron comparison” could provide more upside to same-store sales.
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