A Sweetgreen banner on the NYSE, November 18, 2021.
Sweetgreen on Thursday reported widening losses but strong fourth-quarter sales growth and promising performance at its restaurants in its first quarterly report since its initial public offering.
The salad chain also issued a strong sales outlook for 2022, although it does not expect to turn a profit yet.
Shares of the company soared 20% in extended trading. After a strong debut on the public markets in mid-November, the stock has struggled as investors question the company’s lack of profitability, a rarity for publicly traded restaurants.
Sweetgreen shares have shed more than 50% since debuting on the public market, dragging its market value down to roughly $ 2.2 billion. The stock closed Thursday down roughly 11% before spiking in extended trading on the back of its results.
The chain reported a fourth-quarter net loss 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 recorded a $ 21.5 million increase in stock-based compensation. Sweetgreen also said that price hikes and killing off its loyalty program helped restaurant-level margins, although higher wages and employee bonuses weighed on its bottom line.
Net sales rose 63% to $ 96.4 million, topping expectations of $ 84.7 million, according to a survey of analysts by Refinitiv.
The chain reported same-store sales growth of 36% for the quarter. In the year-ago period, the company saw its same-store sales shrink by 28% as the pandemic took a toll on demand for its hot bowls and salads.
Most of the credit for the quarterly jump in same-store sales comes from an increase in orders, although the chain also reported a 4% benefit from price hikes.
Sweetgreen said 65% of its sales came from digital orders. While impressive when compared against the broader restaurant industry, that marks a decrease for the company, as more than three-quarters of its transactions came from online orders during the year-ago period.
This quarter, more customers opted to order through third parties like DoorDash and Grubhub, which charge heftier fees for pick-up and delivery orders and can dig into Sweetgreen’s margins.
Looking ahead to the first quarter, Sweetgreen said it anticipates revenue of between $ 100 million and $ 102 million and same-store sales growth of 30% to 33%. It’s also expecting adjusted losses before interest, taxes, depreciation and amortization of between $ 18 million and $ 20 million.
For the full year, Sweetgreen anticipates revenue of $ 515 million to $ 535 million and same-store sales growth of 20% to 26%. Wall Street is expecting the chain to see net sales of $ 513.1 million in 2022, though analyst coverage on the stock is light.
The company expects to see adjusted losses before interest, taxes, depreciation and amortization of $ 33 million to $ 40 million for 2022. It’s also planning on opening at least 35 new locations during the year.
Read the full earnings report here.
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