Shake Shack’s fourth-quarter gross sales outlook drives shares up double digits

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Shake Shack Inc.
SHAK,
+7.66%

inventory rallied 11.8% on Wednesday and 19.8% for the week up to now after the burger chain issued a fourth-quarter enterprise replace that expects gross sales to beat the Avenue.

Shake Shack’s preliminary fourth-quarter sales totaled $157.5 million, above the FactSet consensus of $153.2 million. Identical-store gross sales fell 17.4%, however that was higher than the FactSet consensus for a 19.5% decline.

Suburban same-store gross sales had been flat with 2019, however city same-store gross sales had been down 31%, with Manhattan plunging 49% throughout the quarter.

However digital channels had an excellent exhibiting, accounting for 59% of gross sales and greater than tripling year-over-year.

Shake Shack executives spent their presentation at this 12 months’s ICR Convention discussing the long run.

See: McDonald’s basking in 2021 analyst optimism, while some analysts see rough road ahead for pizza chains

Now that the corporate has laid the groundwork with providers like curbside pickup, executives talked up the brand new restaurant codecs and menu objects it has deliberate, and the brand new prospects it might purchase with the continued use of digital instruments.

“Given the near-term momentum and their long-term focus, we weren’t stunned with their optimistic tone and consider there are attention-grabbing initiatives in play, which may function optimistic catalysts,” wrote Brett Levy in a word for MKM Companions.

Given the near-term challenges, MKM maintained its impartial inventory score. Nonetheless, MKM raised its worth goal to $85 from $65.

BTIG analysts referred to as Shake Shack’s preannouncement “probably the most spectacular” of these which were issued for the convention. BTIG charges Shake Shack inventory impartial.

Analysts led by Peter Saleh mentioned traders are wanting on the long-term after a troublesome finish to 2020, although Shake Shack’s numbers “bucked the pattern.”

“Whereas restaurant gross sales developments have clearly weakened during the last two months with additional capability restrictions, traders are wanting previous the near-term challenges in hopes of being rewarded with extra environment friendly enterprise fashions following this disruption,” analysts mentioned.

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Although challenges stay, Shake Shack’s Chief Monetary Officer Tara Comonte was upbeat throughout the presentation.

“So 2020 was the foundational 12 months for us by way of constructing and bringing a few of these capabilities to market. We remodeled the enterprise to a excessive degree of digital combine,” Comonte mentioned, in line with a FactSet transcript.

“However now we’re going to construct upon it. We’re solely getting began right here.”

Shack Shack shares have soared greater than 71% during the last 12 months. The S&P 500 index
SPX,
+0.23%

is up 16% for the interval.

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