A employee wears a Sweetgreen Inc. hat while preparing food contained in the company’s restaurant in Boston, Massachusetts.
Adam Glanzman | Bloomberg | Getty Images
Shares of Sweetgreen fell after the salad chain lowered its 2022 forecast.
The restaurant company also said it laid off 5% of its support center workforce and can downsize to a smaller office constructing to lower its operating expenses.
Shares in the corporate fell greater than 20% in after-hours trading following the earnings report Tuesday.
As of Tuesday’s close, Sweetgreen’s stock has fallen about 47% this 12 months to $16.85. It reached a high of $56.20 shortly after its IPO in November.
Here’s what the corporate reported compared with what Wall Street was expecting, based on a survey of analysts by Refinitiv:
- Loss per share: 36 cents, according to estimates
- Revenue: $124.9 million vs. $130.2 million expected
Sweetgreen sales softened around Memorial Day, leading the corporate to revise its forecast lower, CFO Mitch Reback said in a press release.
On the corporate’s conference call, executives attributed the slowdown to various aspects, including “unprecedented levels of summer travel,” a slow return to the office and one other wave of latest Covid-19 cases.
Within the quarter, ended June 26, Sweetgreen’s net sales rose 45% to $124.9 million. Its same-store sales climbed 16%, boosted by 6% menu price hikes.
For the 12 months, Sweetgreen now expects annual revenue of $480 million to $500 million, down from its prior forecast of $515 million to $535 million. The chain also revised its outlook for same-store sales, predicting growth of 13% to 19%, down from the previous projection of 20% to 26%.
“We predict that it is a conservative estimate, but looking back, we have just been mistaken on so lots of these calls,” Reback said on the decision.
Furthermore, Sweetgreen also modified its outlook for adjusted loss before interest, taxes, depreciation and amortization to a spread of $45 million to $35 million, wider than its previous range of $40 million to $33 million.
However the chain explained the steps it’s taking to attain profitability, including layoffs and reducing its real estate footprint by moving to a smaller office. Severance packages and related advantages are expected to cost the corporate between $500,000 to $800,000, while the office move will cost $8.4 million to $9.9 million. The fees are expected to affect its third-quarter results.
Sweetgreen reported a second-quarter net lack of $40 million, or 36 cents per share, wider than a net lack of $26 million, or $1.55 per share, a 12 months earlier. The corporate blamed a rise in stock-based compensation for its increasing losses.
Correction: A previous version of this story misstated Sweetgreen’s previous forecast for its same-store sales growth.