Shake Shack Heads Lower After Reporting Results

Fast food restaurant chain Shake Shack saw its shares head lower after the company reported financial results and an outlook for weaker same-store sales this year.

While the results for the fourth quarter were better than expected, initially sending shares higher on Monday, shares then backtracked when Wall Street digested the company’s forecast.

For 2019, Shake Shack is forecasting same-store sales to be flat or rise by 1%. Revenue is forecast to be between $570 million and $576 million.

Analysts were expecting the company to see $576 million in sales in 2019.
For the fourth quarter, Shake Shack reported earnings per share of 6 cents. Analyst had been expecting 3 cents. Revenue at $124.3 million was better than the $118.8 million that was expected.

During the quarter, 20 new locations were opened domestically.

CEO Randy Garutti said on the earnings call, “We ended 2018 with a strong fourth quarter, capping off another tremendous year of growth here at Shake Shack. 2018 was by far our most ambitious year again. We opened 49 restaurants, 34 company-operated and 50 licensed, operating across 27 states and 13 countries. Our team put forth an incredible collective effort in the fourth quarter opening 17 company-operated and three licensed Shacks, with seven of those opening in the last two weeks of the year. We grew total revenue in 2018 by 28% to $459 million and adjusted EBITDA of $73.9 million, representing more than 14% growth from 2017 and delivered positive Same-Shack sales just over 1%.”

“In the fourth quarter, we posted Same-Shack sales of 2.3% and reported our strongest traffic number in 10 quarters returning to nearly flat. As we celebrate Shake-Shacks’ 15th birthday this coming summer, I’d like to take a moment to reflect on how far we’ve come. Few weeks ago, when I was meeting with the group of our Shack leaders, I shared a memory from 2004. As we close our doors on a busy day at the original and only Shack at a time at Madison Square Park, we achieved something unthinkable. Our first $5,000 day. I remember how excited we all felt that day. Once upon dining leaders and our hard working crew reaching $5,000 in sales of hot dogs, burger, shakes and fries. Fast forward to the time of our IPO, we exited 2014 with nearly $120 million of total revenue and this past quarter, Shake Shack delivered our first ever $2 million a day. In the four years, we’ve increased revenue by nearly 300%.”

Disclaimer: We have no position in Shake Shack Inc. (NYSE: SHAK) and have not been compensated for this article.