A Sweetgreen banner on the NYSE, November 18, 2021.
Sweetgreen on Thursday reported mounting losses but strong fourth-quarter sales growth and promising performance at its restaurants in its first quarterly report since its IPO.
The salad chain has also released a strong sales outlook for 2022, although it does not yet expect to turn a profit.
Shares of the company soared 20% in extended trading. After a strong public markets debut in mid-November, the stock has struggled as investors question the company’s lack of profitability, a rarity for publicly traded restaurants.
Shares of Sweetgreen have lost more than 50% since their public market debut, causing its market value to plummet to around $2.2 billion. The stock closed down around 11% on Thursday before surging in extended trade following its results.
The chain posted a net loss in the fourth quarter of $66.2 million, or $1.14 per share, compared with 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 price increases and the elimination of its loyalty program helped restaurant-level margins, although higher wages and employee bonuses weighed on its results.
Net sales rose 63% to $96.4 million, beating expectations of $84.7 million, according to a Refinitiv analyst survey.
The chain reported comparable store sales growth of 36% for the quarter. In the prior-year period, the company saw same-store sales decline 28% as the pandemic weighed on demand for its hot bowls and salads.
Most of the credit for the quarterly jump in same-store sales came from an increase in orders, although the chain also reported a 4% profit from price increases.
Sweetgreen said 65% of its sales come from digital orders. While impressive compared to the entire restaurant industry, this marks a downturn for the business, as more than three-quarters of its transactions came from online orders in the prior year period. .
This quarter, more customers opted to order through third parties like DoorDash and Grubhub, which charge higher fees for pickup and delivery orders and can tap into Sweetgreen’s margins.
Looking to the first quarter, Sweetgreen said it expects revenue of between $100 million and $102 million and comparable store sales growth of 30% to 33%. It also expects adjusted losses before interest, taxes, depreciation and amortization of between $18 million and $20 million.
For the full year, Sweetgreen forecasts revenue of $515 million to $535 million and comparable store sales growth of 20 to 26 percent. Wall Street expects the chain to post net sales of $513.1 million in 2022, although analyst coverage of the stock is low.
The company expects to see adjusted losses before interest, taxes, depreciation and amortization of $33 million to $40 million for 2022. It also expects to open at least 35 new locations during the year.
Read the full earnings report here.
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