Categories Earnings, Retail

Shake Shack Q1 profit dips 27% but beats estimates

Shake Shack (NYSE: SHAK) reported a 27% dip in earnings for the first quarter of 2019 due to higher costs and expenses as well as an increase in income tax expense. However, the results exceeded analysts’ expectations. The company raised its revenue guidance for the full year 2019.

Net income fell by 27% to $2.55 million and earnings dropped by 38% to $0.08 per share. Adjusted earnings decreased by 13.3% to $0.13 per share.

Total revenue soared by 34% to $132.61 million. Shack sales increased by 33.8% due primarily to the opening of 34 new domestic company-operated Shacks between the first quarter of 2019 and the first quarter of 2018, as well as same-Shack sales growth. Licensing revenue climbed by 33.5% due primarily to the opening of 16 net new licensed Shacks.

Shake Shack first quarter same-Shack sales growth chart

Same-Shack sales increased by 3.6% versus a 1.7% growth in the previous year quarter. This increase consisted of a 1.6% rise in guest traffic and a combined growth of 2% in price and sales mix. The comparable Shack base includes those restaurants open for 24 full fiscal months or longer. For the first quarter, the comparable Shack base included 66 Shacks versus 44 Shacks a year ago.

Looking ahead into the full year 2019, the company lifted its total revenue outlook to the range of $576 million to $582 million from the prior range of $570 million to $576 million. The same-shack sales growth forecast is raised to the range of 1% to 2% from the previous range of 0% to 1%. The company continues to expect opening 36 to 40 domestic company-operated Shack stores and 16 to 18 licensed Shack stores during the full year 2019.

For the first quarter, the average weekly sales for domestic company-operated Shacks decreased to $79,000 from $81,000 a year ago, primarily due to the addition of newer Shacks at a broader range of average unit volumes.

Image Courtesy: Shake Shack / Facebook post

During the first quarter, Shake Shack opened five domestic company-operated Shacks, which included its first Shack in Providence, Rhode Island. The company opened four international licensed Shacks, which included a Shack in the City of Shanghai, its first Shack in mainland China. Also, the company opened three domestic licensed Shacks at Dallas-Fort Worth International Airport, Phoenix Sky Harbor International Airport and Cleveland Hopkins International Airport.

During the quarter, Shake Shack closed two international licensed Shacks, World Trade Center in UAE and Avia Park in Russia. Subsequent to the end of the quarter, the company opened three domestic company-operated Shacks and three licensed Shacks, including its first Shack in Singapore, located in the brand new Jewel Changi Airport.

Shares of Shake Shack ended Thursday’s regular session up 3.15% at $62.91 on the NYSE. Following the earnings release, the stock inched up over 7% in the after-market session.

 

Listen to on-demand earnings calls and hear how management responds to analysts’ questions

Most Popular

United Parcel Service (UPS) seems on track to regain lost strength

Cargo giant United Parcel Service, Inc. (NYSE: UPS) ended fiscal 2023 on a weak note, reporting lower revenues and profit for the fourth quarter. The company experienced a slowdown post-pandemic

IPO Alert: What to look for when Boundless Bio goes public

Boundless Bio is preparing to debut on the Nasdaq stock market this week, and become the latest addition to the list of biotech firms that have launched IPOs this year.

Nike (NKE) bets on innovation and partnerships to return to high growth

Sneaker giant Nike, Inc. (NYSE: NKE) has been going through a rough patch for some time, with sales coming under pressure from weak demand and rising competition. Post-pandemic, the company

Add Comment
Loading...
Cancel
Viewing Highlight
Loading...
Highlight
Close
Top