Sweetgreen banner of the NYSE, November 18, 2021
Source: NYSE
Sweetgreen on Thursday reported growing losses, but strong sales growth in the fourth quarter and a promising performance in its restaurants in its first quarterly report since its initial public offering.
The salad chain has also issued strong sales forecasts for 2022, although it still does not expect a profit.
The company’s shares jumped 20% in expanded trading. After a strong debut in public markets in mid-November, stocks are struggling as investors question the company’s lack of profitability, which is rare for publicly traded restaurants.
Shares of Sweetgreen fell more than 50 percent since its debut in the public market, moving to a market value of approximately $ 2.2 billion. Shares closed about 11% on Thursday before jumping into extended trading amid results.
The chain reported a net loss for the fourth quarter of $ 66.2 million, or $ 1.14 per share, compared to a loss of $ 41.1 million, or $ 2.49 per share, a year earlier. The company registered an increase of $ 21.5 million in share-based compensation. Sweetgreen also said that raising prices and abolishing the loyalty program have helped restaurant-level margins, although higher salaries and employee bonuses outweigh the end result.
Net sales rose 63% to $ 96.4 million, exceeding expectations of $ 84.7 million, according to a study by Refinitiv analysts.
The chain reported sales growth in the same store of 36% for the quarter. In the period a year ago, the company noted that its sales in the same store shrank by 28% as the pandemic affected demand for hot bowls and salads.
Most of the credit for the quarterly jump in sales at the same store comes from an increase in orders, although the chain also reported a 4% benefit from price increases.
Sweetgreen said 65% of its sales come from digital orders. Although impressive compared to the wider restaurant industry, this has declined for the company, as more than three-quarters of its transactions come from online orders from a year ago.
During this quarter, more customers chose to order through third parties such as DoorDash and Grubhub, which charge higher fees for pick-up and delivery orders and can dig into Sweetgreen’s margins.
Looking ahead to the first quarter, Sweetgreen said it expects revenue of between $ 100 million and $ 102 million and sales growth in the same store from 30% to 33%. He also expects adjusted losses before interest, taxes, depreciation and amortization between $ 18 million and $ 20 million.
For the full year, Sweetgreen expects revenue from $ 515 million to $ 535 million and sales growth in the same store from 20% to 26%. Wall Street expects the chain to report net sales of $ 513.1 million in 2022, although analysts’ coverage of the stock is weak.
The company expects to see adjusted losses before interest, taxes, depreciation and amortization from $ 33 million to $ 40 million by 2022. In addition, it plans to open at least 35 new locations during the year.
Read the full revenue statement here.
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