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Shake Shack Inc. (SHAK - Free Report) reported fourth-quarter fiscal 2023 results, wherein earnings and revenues surpassed the Zacks Consensus Estimate. Moreover, both metrics increased year over year. The bottom line beat the consensus estimate for the fifth straight quarter.
The company’s earnings reflect growth in sales driven by digital marketing strategies and sequentially improving traffic. It also intends to continue focusing on its global footprint expansion plans for the upcoming period.
Earnings & Revenue Details
Shake Shack’s fiscal fourth-quarter adjusted earnings were 2 cents per share, beating the Zacks Consensus Estimate of breakeven. In the prior-year quarter, the company reported a loss of 6 cents per share.
Quarterly revenues of $286.2 million surpassed the Zacks Consensus Estimate of $280 million. However, the top line increased 20% on a year-over-year basis. Same-Shack sales improved 2.8% year over year.
Shack sales rose 19.9% year over year to $275.8 million. Our model predicted the metric to improve 16.5% from the year-ago levels.
Licensing revenues jumped 21.7% year over year to $10.5 million. We expected the metric to gain 23.2% from a year ago. Shack system-wide sales soared 21.4% year over year to $442.1 million.
Operating Highlights
Operating loss totaled $1.3 million compared with $6.3 million in the prior-year quarter. Shack-level operating profit margin was 19.8%, up 80 basis points (bps) year over year.
In the fiscal fourth quarter, food and paper costs (as percentages of company revenues) decreased 40 bps year over year to 29.1%. Labor and related costs (as percentages of company revenues) also declined 40 bps year over year to 28.5%. Total expenses (as percentages of company revenues) notably declined 210 bps year over year to 100.5%.
Adjusted EBITDA for the reported quarter amounted to $31.4 million, up 60.6% from $19.6 million in the year-ago quarter. Adjusted EBITDA margin expanded 280 bps year over year to 11%.
Balance Sheet
As of Dec 27, 2023, cash and cash equivalents totaled $224.7 million compared with $230.5 million as of Dec 28, 2022. Total long-term debt at the end of the reported quarter increased to $245.6 million from $244.6 million as of Dec 28, 2022.
Q1 & Fiscal 2024 Outlook
For first-quarter fiscal 2024, the company expects total revenues to be between $288.4 million and $292.8 million. The Zacks Consensus Estimate is pegged at $289.2 million. Licensing revenues are projected in the range of $9.4-$9.8 million.
For fiscal 2024, the company now expects revenues in the range of $1.21 to $1.25 billion. Licensing revenues are now projected to be between $45 million and $47 million. Shack-level operating profit margins are projected to reach 20-21% compared with the previously expected 19.25-20%.
The company expects approximately 40 company-operated openings during fiscal 2024. It also projects approximately 40 licensed Shack openings in the same time frame.
Zacks Rank
Shake Shack currently carries a Zacks Rank #3 (Hold).
Key Picks
Below, we present some better-ranked stocks in the Zacks Retail – Restaurants industry.
Carrols Restaurant Group, Inc. (TAST - Free Report) sports a Zacks Rank #1 (Strong Buy). It has a trailing four-quarter earnings surprise of 102%, on average. Shares of TAST have rallied 379.2% in the past year. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for TAST’s 2024 sales and EPS indicates 3.8% and 25.5% growth, respectively, from the year-ago levels.
Cracker Barrel Old Country Store, Inc. (CBRL - Free Report) carries a Zacks Rank #2 (Buy). Shares of CBRL have declined 4% in the past three months.
The Zacks Consensus Estimate for CBRL’s 2024 sales indicates 1.1% growth from the year-earlier levels.
Dave & Buster's Entertainment, Inc. (PLAY - Free Report) carries a Zacks Rank #2. It has a trailing four-quarter earnings surprise of 34.5%, on average. The stock has risen 39.1% in the past year.
The Zacks Consensus Estimate for PLAY’s 2024 sales and EPS suggests a rise of 12.8% and 14.3%, respectively, from the prior-year levels.
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Shake Shack (SHAK) Q4 Earnings & Revenues Beat Estimates
Shake Shack Inc. (SHAK - Free Report) reported fourth-quarter fiscal 2023 results, wherein earnings and revenues surpassed the Zacks Consensus Estimate. Moreover, both metrics increased year over year. The bottom line beat the consensus estimate for the fifth straight quarter.
The company’s earnings reflect growth in sales driven by digital marketing strategies and sequentially improving traffic. It also intends to continue focusing on its global footprint expansion plans for the upcoming period.
Earnings & Revenue Details
Shake Shack’s fiscal fourth-quarter adjusted earnings were 2 cents per share, beating the Zacks Consensus Estimate of breakeven. In the prior-year quarter, the company reported a loss of 6 cents per share.
Quarterly revenues of $286.2 million surpassed the Zacks Consensus Estimate of $280 million. However, the top line increased 20% on a year-over-year basis. Same-Shack sales improved 2.8% year over year.
Shack sales rose 19.9% year over year to $275.8 million. Our model predicted the metric to improve 16.5% from the year-ago levels.
Licensing revenues jumped 21.7% year over year to $10.5 million. We expected the metric to gain 23.2% from a year ago. Shack system-wide sales soared 21.4% year over year to $442.1 million.
Operating Highlights
Operating loss totaled $1.3 million compared with $6.3 million in the prior-year quarter. Shack-level operating profit margin was 19.8%, up 80 basis points (bps) year over year.
In the fiscal fourth quarter, food and paper costs (as percentages of company revenues) decreased 40 bps year over year to 29.1%. Labor and related costs (as percentages of company revenues) also declined 40 bps year over year to 28.5%. Total expenses (as percentages of company revenues) notably declined 210 bps year over year to 100.5%.
Adjusted EBITDA for the reported quarter amounted to $31.4 million, up 60.6% from $19.6 million in the year-ago quarter. Adjusted EBITDA margin expanded 280 bps year over year to 11%.
Balance Sheet
As of Dec 27, 2023, cash and cash equivalents totaled $224.7 million compared with $230.5 million as of Dec 28, 2022. Total long-term debt at the end of the reported quarter increased to $245.6 million from $244.6 million as of Dec 28, 2022.
Q1 & Fiscal 2024 Outlook
For first-quarter fiscal 2024, the company expects total revenues to be between $288.4 million and $292.8 million. The Zacks Consensus Estimate is pegged at $289.2 million. Licensing revenues are projected in the range of $9.4-$9.8 million.
For fiscal 2024, the company now expects revenues in the range of $1.21 to $1.25 billion. Licensing revenues are now projected to be between $45 million and $47 million. Shack-level operating profit margins are projected to reach 20-21% compared with the previously expected 19.25-20%.
The company expects approximately 40 company-operated openings during fiscal 2024. It also projects approximately 40 licensed Shack openings in the same time frame.
Zacks Rank
Shake Shack currently carries a Zacks Rank #3 (Hold).
Key Picks
Below, we present some better-ranked stocks in the Zacks Retail – Restaurants industry.
Carrols Restaurant Group, Inc. (TAST - Free Report) sports a Zacks Rank #1 (Strong Buy). It has a trailing four-quarter earnings surprise of 102%, on average. Shares of TAST have rallied 379.2% in the past year. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for TAST’s 2024 sales and EPS indicates 3.8% and 25.5% growth, respectively, from the year-ago levels.
Cracker Barrel Old Country Store, Inc. (CBRL - Free Report) carries a Zacks Rank #2 (Buy). Shares of CBRL have declined 4% in the past three months.
The Zacks Consensus Estimate for CBRL’s 2024 sales indicates 1.1% growth from the year-earlier levels.
Dave & Buster's Entertainment, Inc. (PLAY - Free Report) carries a Zacks Rank #2. It has a trailing four-quarter earnings surprise of 34.5%, on average. The stock has risen 39.1% in the past year.
The Zacks Consensus Estimate for PLAY’s 2024 sales and EPS suggests a rise of 12.8% and 14.3%, respectively, from the prior-year levels.