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Is Shake Shack (SHAK) Doomed to Have a Terrible 2023 Too?
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2022 has been tough for Shake Shack Inc. (SHAK - Free Report) . The company’s shares have declined 37% year to date, compared with the industry’s fall of 9.1%. Inflationary pressures and supply-chain disruptions remain headwinds. However, SHAK is gradually coming out of the woods. Going forward, increased focus on digital initiatives and unit expansion efforts will likely aid the company.
The Zacks Rank #3 (Hold) company’s sales and earnings in fiscal 2023 is expected to witness growth of 21.5% and 77.5% year over year, respectively.
Factors Likely to Drive Growth
Shake Shack has been investing in digital transformation which is crucial to the company’s growth. Digital sales continue to impress investors.
During the fiscal third quarter, digital sales increased 1.9% year over year to $78.9 million and accounted for nearly 36% of Shack sales. During the quarter, the company stated to have retained 73% of digital sales, despite solid recovery of in-shack business.
The company has been making more investments in digitization in an effort to sustain its digital guest enhancement strategies in the near term. The company’s digital retention continues to remain strong.
Image Source: Zacks Investment Research
Shake Shack is committed to effectively strategizing its expansion plans. In 2021, the company opened 36 company-operated Shacks. The company anticipates increasing its store count to 35-40 Shacks within fiscal 2022.
The company also expects to open stores in Thailand and Malaysia (in 2023) through a new development agreement. During third-quarter fiscal 2022, the company opened two new domestic company-operated Shacks (in New York and Atlanta), three new domestic-licensed Shack (Chantilly, Cranbury and Nashville) and three new international-licensed Shacks (Chengdu, Shanghai and Seoul).
The company, operating more than 150 licensed restaurants, is targeting to open 7-10 new licensed Shacks in fourth-quarter fiscal 2022 and 27-30 licensed openings in fiscal 2022. Since December, the company has opened 6 company-operated drive-thrus.
By 2022 end, the company is planning to open at least 10 drive-thrus and expects to open 10-15 more in 2023. For 2023, the company anticipates opening approximately 40 domestic company-operated Shacks, calling for 16% unit growth on a year-over-year basis.
Shake Shack continues to impress investors with robust global Same-Shack sales growth. During the first, second, third and fourth quarters of fiscal 2021, Same-Shack sales rose 5.7%, 52.7%, 48.1% and 20.8% year over year, respectively. Same-Shack sales rose 10.3% and 10.1% in the first and second quarters of fiscal 2022, respectively.
During third-quarter fiscal 2022, Same-Shack sales rose 6.3% year over year. The upside was primarily driven by traffic growth (of 2.9%) and price mix. Urban Same-Shack sales rose 11% on a year-over-year basis. In October, Same-Shack sales increased 8.3% year over year, driven by menu price and mid-single-digit traffic growth year over year in urban markets.
The Zacks Consensus Estimate for TGLS’ 2023 sales and EPS suggests growth of 11.2% and 9%, respectively, from the year-ago period’s levels.
Wingstop carries a Zacks Rank #2 (Buy). WING has a long-term earnings growth rate of 12%. Shares of WING have decreased 11.1% in the past year.
The Zacks Consensus Estimate for Wingstop’s 2023 sales and EPS suggests growth of 18.3% and 16.1%, respectively, from the comparable year-ago period’s levels.
Chuy’s Holdings currently carries a Zacks Rank #2. CHUY has a trailing four-quarter earnings surprise of 18.6%, on average. Shares of CHUY have declined 1.1% in the past year.
The Zacks Consensus Estimate for Chuy’s Holdings 2023 sales and EPS suggests growth of 8.6% and 10.4%, respectively, from the corresponding year-ago period’s levels.
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Is Shake Shack (SHAK) Doomed to Have a Terrible 2023 Too?
2022 has been tough for Shake Shack Inc. (SHAK - Free Report) . The company’s shares have declined 37% year to date, compared with the industry’s fall of 9.1%. Inflationary pressures and supply-chain disruptions remain headwinds. However, SHAK is gradually coming out of the woods. Going forward, increased focus on digital initiatives and unit expansion efforts will likely aid the company.
The Zacks Rank #3 (Hold) company’s sales and earnings in fiscal 2023 is expected to witness growth of 21.5% and 77.5% year over year, respectively.
Factors Likely to Drive Growth
Shake Shack has been investing in digital transformation which is crucial to the company’s growth. Digital sales continue to impress investors.
During the fiscal third quarter, digital sales increased 1.9% year over year to $78.9 million and accounted for nearly 36% of Shack sales. During the quarter, the company stated to have retained 73% of digital sales, despite solid recovery of in-shack business.
The company has been making more investments in digitization in an effort to sustain its digital guest enhancement strategies in the near term. The company’s digital retention continues to remain strong.
Image Source: Zacks Investment Research
Shake Shack is committed to effectively strategizing its expansion plans. In 2021, the company opened 36 company-operated Shacks. The company anticipates increasing its store count to 35-40 Shacks within fiscal 2022.
The company also expects to open stores in Thailand and Malaysia (in 2023) through a new development agreement. During third-quarter fiscal 2022, the company opened two new domestic company-operated Shacks (in New York and Atlanta), three new domestic-licensed Shack (Chantilly, Cranbury and Nashville) and three new international-licensed Shacks (Chengdu, Shanghai and Seoul).
The company, operating more than 150 licensed restaurants, is targeting to open 7-10 new licensed Shacks in fourth-quarter fiscal 2022 and 27-30 licensed openings in fiscal 2022. Since December, the company has opened 6 company-operated drive-thrus.
By 2022 end, the company is planning to open at least 10 drive-thrus and expects to open 10-15 more in 2023. For 2023, the company anticipates opening approximately 40 domestic company-operated Shacks, calling for 16% unit growth on a year-over-year basis.
Shake Shack continues to impress investors with robust global Same-Shack sales growth. During the first, second, third and fourth quarters of fiscal 2021, Same-Shack sales rose 5.7%, 52.7%, 48.1% and 20.8% year over year, respectively. Same-Shack sales rose 10.3% and 10.1% in the first and second quarters of fiscal 2022, respectively.
During third-quarter fiscal 2022, Same-Shack sales rose 6.3% year over year. The upside was primarily driven by traffic growth (of 2.9%) and price mix. Urban Same-Shack sales rose 11% on a year-over-year basis. In October, Same-Shack sales increased 8.3% year over year, driven by menu price and mid-single-digit traffic growth year over year in urban markets.
Key Picks
Some better-ranked stocks in the Zacks Retail-Wholesale sector are Tecnoglass Inc. (TGLS - Free Report) , Wingstop Inc. (WING - Free Report) and Chuy's Holdings, Inc. (CHUY - Free Report) .
Tecnoglass currently sports a Zacks Rank #1 (Strong Buy). Shares of the company have gained 21.6% in the past year. You can see the complete list of today's Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for TGLS’ 2023 sales and EPS suggests growth of 11.2% and 9%, respectively, from the year-ago period’s levels.
Wingstop carries a Zacks Rank #2 (Buy). WING has a long-term earnings growth rate of 12%. Shares of WING have decreased 11.1% in the past year.
The Zacks Consensus Estimate for Wingstop’s 2023 sales and EPS suggests growth of 18.3% and 16.1%, respectively, from the comparable year-ago period’s levels.
Chuy’s Holdings currently carries a Zacks Rank #2. CHUY has a trailing four-quarter earnings surprise of 18.6%, on average. Shares of CHUY have declined 1.1% in the past year.
The Zacks Consensus Estimate for Chuy’s Holdings 2023 sales and EPS suggests growth of 8.6% and 10.4%, respectively, from the corresponding year-ago period’s levels.