Shake Shack slips 11% after revenue forecast misses lowest Wall Street estimate
- Shake Shack plunged as much as 11% after reporting lower-than-expected revenue for its fiscal fourth quarter.
- The restaurant chain's 2020 revenue forecast also disappointed, missing the lowest estimate among Wall Street analysts.
- Shake Shack could see a dent to near-term performance from its investments in new items and locations, but "the company will ultimately benefit from this strategy," CEO Randy Garutti said in the report.
- Watch Shake Shack trade live here.
Shake Shack reported 2020 revenue guidance on Monday that fell below Wall Street's lowest estimate.
The restaurant chain's fiscal fourth-quarter revenue fell below expectations, while earnings per share trounced analysts' projection for a quarterly loss. Same-store sales, for locations open for at least two years, fell more than anticipated in the quarter ending December 25.
Shake Shack stock tumbled as much as 11% in late Monday trading, extending the 1.6% fall seen during the day's regular trading hours.
Here are the key numbers:
Revenue: $151.4 million, versus the $153.1 million estimate.
Adjusted earnings per share: $0.06, versus the -$0.01 estimate.
Same-store sales: -3.6%, versus the -2.5% estimate.
2020 revenue guidance: $712 million to $720 million, versus the $735.6 million estimate (range of $722 million to $762 million from analysts surveyed by Bloomberg).
The company attributed its sales miss to the relatively short holiday season in 2019, favorable weather in the year prior, and "less menu innovation."
Shake Shack aims to hit double-digit earnings growth in the near future by investing in new menu items, partnerships, and new locations. The company's CEO warned such upfront costs could lower performance in upcoming quarters but assured investors of their future value.
"We recognize this level of growth and investment, at times, can have a near-term impact on same-Shack sales and other aspects of our financial performance, but we believe the company will ultimately benefit from this strategy over time," CEO Randy Garutti said in the report.
Shake Shack closed at $73.57 per share on Monday, up about 20% year-to-date.
The company has four "buy" ratings, 12 "hold" ratings, and two "sell" ratings from analysts, with a consensus price target of $72.17, according to Bloomberg data.
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