Shake Shack (SHAK) Q3 Earnings Match Estimates, Revenues Lag
Shake Shack Inc. SHAK reported third-quarter fiscal 2021 results, wherein earnings matched the Zacks Consensus Estimate but revenues lagged the same. However, both the metrics improved year over year.
Earnings & Revenue Details
During the fiscal third quarter, the company posted an adjusted loss of 5 cents per share, which came in line with the Zacks Consensus Estimate. In the prior-year quarter, it had reported an adjusted loss of 11 cents. Quarterly revenues of $193.9 million missed the Zacks Consensus Estimate of $199 million. However, the top line improved 48.7% on a year-over-year basis.
Shack sales during the quarter rose 48.1% to $187 million, while licensed revenues surged 68.3% to $6.9 million year over year. Shack system-wide sales in third-quarter fiscal 2021 climbed 53.1% year over year to $299 million.
Shake Shack, Inc. Price, Consensus and EPS Surprise
Shake Shack, Inc. price-consensus-eps-surprise-chart | Shake Shack, Inc. Quote
Comps Discussion
Same-Shack sales rose 48.1% in third-quarter 2021, primarily driven by the opening of 30 net new domestic company-operated Shacks between Sep 23, 2020 and Sep 29, 2021, and constant sales recovery across Shack markets. During third-quarter 2021, total digital sales, including orders placed on the Shake Shack app, website and third-party delivery platforms, represented nearly 42% of Shack sales.
Meanwhile, same-Shack sales increased 24.8% year over year owing to robust recovery across traffic.. During the quarter under review, the company witnessed constant recovery across the urban markets. Markets like New York City, Los Angeles, Chicago and Boston acted as key catalysts in the urban markets.
During the third quarter of fiscal 2021, its average weekly sales were $72,000, flat sequentially.
Operating Highlights
During the third quarter, the company’s operating loss totaled $2.6 million, compared with an operating loss of $6.8 million in the prior-year quarter. Shack-level operating profit increased 58.6% year over year to $29.6 million in third-quarter 2021.
Total expenses (as a percentage of company revenues) decreased 380 basis points (bps) year over year. Food and paper costs (as a percentage of company revenues) increased 100 bps year over year. Labor and related expenses increased 110 bps year over year to 29%.
Adjusted EBITDA for the reported quarter amounted to $15.8 million compared with $8.2 million in the year-ago quarter. Adjusted EBITDA margin expanded 190 bps to 8.2%.
Balance Sheet
As of Sep 29, 2021, cash and cash equivalent totaled $321.4 million compared with $146.9 million as of Dec 30, 2020. Total liabilities at the end of quarter increased to $997 million, compared with $710.9 million at the end of Dec 30, 2020.
Q4 & 2021 Outlook
For fourth-quarter 2021, the company expects total revenues between $193.5 million and $200 million. Shack sales are anticipated in the range of $187 million to $193 million. Its licensed revenues are expected between $6.5 million and $7 million in fourth-quarter 2021.
For fourth-quarter 2021, the company’s Same-Shack Sales are expected to increase mid to high teens year over year. Meanwhile, Shack-Level operating profit is projected in the range of 14-16%.
For 2021, the company anticipates opening 35-38 shacks. Total General and administrative expenses for 2021 is anticipated between $86 million and $88 million. Depreciation expense for 2021 is expected in the range of $60 million to $63 million.
Zacks Rank & Key Picks
Shake Shack carries a Zacks Rank #4 (Sell).
Some better-ranked stocks in the Zacks Retail - Restaurants industry space are McDonald's Corporation MCD, Noodles & Company NDLS and Dave & Buster's Entertainment, Inc. PLAY. Denny's sports a Zacks Rank #1 (Strong Buy), while Noodles & Company and Dave & Buster's carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
McDonald's has a three-five-year earnings per share growth rate of 11.9%.
Noodles & Company’s 2021 earnings are expected to surge 182.8%.
Dave & Buster's has a trailing four-quarter earnings surprise of 201.8%, on average.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
McDonald's Corporation (MCD) : Free Stock Analysis Report
Noodles & Company (NDLS) : Free Stock Analysis Report
Dave & Buster's Entertainment, Inc. (PLAY) : Free Stock Analysis Report
Shake Shack, Inc. (SHAK) : Free Stock Analysis Report
To read this article on Zacks.com click here.
