Shake Shack Swings to Better-Than-Expected Quarter

Shake Shack Inc. on Thursday swung to a better-than-expected profit for its first quarter, boosted by strong same-store sales and new location openings, leading the chain to raise its annual guidance.

Same-store sales, which the company counts as locations opened for 24 months or longer, climbed 9.9%, well above the 4.5% predicted by analysts polled by FactSet. For the latest quarter, the number of same-store locations increased to 20 from 13 a year ago. The chain also opened three domestic storefronts.

On the heels of the latest results, Shake Shack said it expects total revenue for the year of between $245 million and $249 million, up from its previous forecast of $237 million to $242 million. It upped its same-store sales growth forecast to between 4% and 5%, up from 2.5% to 3.0%. The company also now expects 16 new domestic locations, up from 13.

"The recent launch of the Chick'n Shack at all domestic company-operated locations has driven traffic growth," said Randy Garutti, CEO of Shake Shack.

Shake Shack once stirred lofty expectations and was seemingly destined to revolutionize the burger experience. But Shake Shack's shares have lost more than 60% of their value since peaking above $90 a year ago.

Shares of the chain rose 5.1% to $35.95 after hours following the earnings report.

Shake Shack's stock tumble came amid expensive plans for rapid advancement. Catering to both fast-food and fast-casual dining consumers, Shake Shack has a tall order to keep its sales momentum going in new locations.

Additionally, the emerging resurgence of McDonald's, revived by its all-day breakfast and improved operations and customer service, has helped cool Shake Shack's fortunes.

In the quarter ended March 30, the company reported profit of $1.5 million, or 7 cents a share, compared with a year-earlier loss of $12.7 million, or $1.06 a share. Excluding certain items, earnings rose to 8 cents from 4 cents.

Revenue jumped 43.3% $54.2 million from $37.8 million.

Analysts polled by Thomson Reuters forecast adjusted earnings of 5 cents a share on revenue of $52 million.

Write to Ezequiel Minaya at [e-mail]

(END) Dow Jones Newswires

May 12, 2016 17:35 ET (21:35 GMT)

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