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Shake Shack Inc. (SHAK - Free Report) has issued preliminary results for first-quarter fiscal 2020, and provided operational and financial updates in response to the ongoing impact of COVID-19 on business and the economy.
Preliminary First-Quarter (Ended Mar 25) Results
Shake Shack reported total revenues of $143 million, of which Shack sales added $138 million and licensing revenues contributed $5 million. In the year-ago period, total revenues were $132.6 million.
Same-Shack sales decreased 12.8% year over year. January and February’s strong performance was offset by March’s 28.5% year-over-year decline. The downside was due to acute impact from COVID-19.
Operating loss was $0.8 million, accounting for 0.5% of total revenues, against operating income of $5.2 million reported a year ago. This included $1.1 million of impairment of property and equipment.
Shack-level operating margin was 19.1% compared with 21% reported in the prior year.
At the end of the reported quarter, cash and marketable securities totaled $104 million. Notably, Shake Shack opened four domestic company-operated Shacks and eight net new licensed Shacks in the quarter.
Financial Highlights
As of Apr 16, the company had $112 million in cash and marketable securities on hand. On Apr 10, it received a $10-million loan under the Paycheck Protection Program or PPP from J.P. Morgan.
Currently, the company estimates cash burn rate within $1.3-$1.5 million per week based on current sales levels and cost-reduction plans. The said metric excludes new Shack capital expenditures, which have been temporarily suspended. Notably, it projects future cash outflows of $12 million related to construction expenses for already completed but unopened Shacks, and about-to-be-completed Shacks. It withdrew the $50-million revolving credit facility on Mar 24.
The company has 33 additional signed leases and intends to open these Shacks as soon as the business environment normalizes.
Importantly, it suspended its previously announced fiscal 2020 (ending Dec 30, 2020) guidance. The company — which shares space with BJ's Restaurants, Inc. (BJRI - Free Report) , Brinker International, Inc. (EAT - Free Report) and Cracker Barrel Old Country Store, Inc. (CBRL - Free Report) in the Zacks Retail - Restaurants industry — will discuss business performance during first-quarter earnings release, scheduled on May 4.
Operational Updates
The company undertook various strategies like modified curbside and digital ordering/take-out models; increased marketing through social media, mobile application and web channels; and addition of new and expansion of existing integrated delivery partners as well as promotional activity on certain delivery marketplaces. Owing to these initiatives, the company has been witnessing increase in sales across domestic company-operated Shacks (excluding those that are closed) over the last two weeks.
The company has temporarily closed 17 Shacks. Half of these were ordered by the government to be mandatorily closed and the rest are located in heavy tourist or travel restricted zones. Due to the closure, it has decided to furlough/lay off more than 1,000 employees across Shack operations and the home office. Shake Shack believes that the business will be affected materially in the near term, as only 57 of the 120 licensed Shacks are open. However, its supply chain has not been affected significantly.
To beat the coronavirus-induced closure impacts, the company has partnered with Goldbelly — a curated online marketing place for regional and artisanal foods. Encouraged by Goldbelly’s at-home kits, it has also stated selling a similar cook-at-home pack available for pick-up in the San Francisco Bay Area Shacks and all digital channels. Also, it is successfully expanding new and the existing partnerships with DoorDash, UberEats, Caviar, and Postmates for delivery.
Price Performance
Share of this Zacks Rank #3 (Hold) company have declined nearly 27% compared with the industry’s 12.3% decline. Estimates for fiscal 2020 have been revised to a loss of 41 cents from earnings of 40 cents in the past 30 days. The downside reflects rapidly evolving market conditions due to the pandemic. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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Shake Shack Q1 Preliminary Results Reflect Coronavirus Woes
Shake Shack Inc. (SHAK - Free Report) has issued preliminary results for first-quarter fiscal 2020, and provided operational and financial updates in response to the ongoing impact of COVID-19 on business and the economy.
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Preliminary First-Quarter (Ended Mar 25) Results
Shake Shack reported total revenues of $143 million, of which Shack sales added $138 million and licensing revenues contributed $5 million. In the year-ago period, total revenues were $132.6 million.
Same-Shack sales decreased 12.8% year over year. January and February’s strong performance was offset by March’s 28.5% year-over-year decline. The downside was due to acute impact from COVID-19.
Operating loss was $0.8 million, accounting for 0.5% of total revenues, against operating income of $5.2 million reported a year ago. This included $1.1 million of impairment of property and equipment.
Shack-level operating margin was 19.1% compared with 21% reported in the prior year.
At the end of the reported quarter, cash and marketable securities totaled $104 million. Notably, Shake Shack opened four domestic company-operated Shacks and eight net new licensed Shacks in the quarter.
Financial Highlights
As of Apr 16, the company had $112 million in cash and marketable securities on hand. On Apr 10, it received a $10-million loan under the Paycheck Protection Program or PPP from J.P. Morgan.
Currently, the company estimates cash burn rate within $1.3-$1.5 million per week based on current sales levels and cost-reduction plans. The said metric excludes new Shack capital expenditures, which have been temporarily suspended. Notably, it projects future cash outflows of $12 million related to construction expenses for already completed but unopened Shacks, and about-to-be-completed Shacks. It withdrew the $50-million revolving credit facility on Mar 24.
The company has 33 additional signed leases and intends to open these Shacks as soon as the business environment normalizes.
Importantly, it suspended its previously announced fiscal 2020 (ending Dec 30, 2020) guidance. The company — which shares space with BJ's Restaurants, Inc. (BJRI - Free Report) , Brinker International, Inc. (EAT - Free Report) and Cracker Barrel Old Country Store, Inc. (CBRL - Free Report) in the Zacks Retail - Restaurants industry — will discuss business performance during first-quarter earnings release, scheduled on May 4.
Operational Updates
The company undertook various strategies like modified curbside and digital ordering/take-out models; increased marketing through social media, mobile application and web channels; and addition of new and expansion of existing integrated delivery partners as well as promotional activity on certain delivery marketplaces. Owing to these initiatives, the company has been witnessing increase in sales across domestic company-operated Shacks (excluding those that are closed) over the last two weeks.
The company has temporarily closed 17 Shacks. Half of these were ordered by the government to be mandatorily closed and the rest are located in heavy tourist or travel restricted zones. Due to the closure, it has decided to furlough/lay off more than 1,000 employees across Shack operations and the home office. Shake Shack believes that the business will be affected materially in the near term, as only 57 of the 120 licensed Shacks are open. However, its supply chain has not been affected significantly.
To beat the coronavirus-induced closure impacts, the company has partnered with Goldbelly — a curated online marketing place for regional and artisanal foods. Encouraged by Goldbelly’s at-home kits, it has also stated selling a similar cook-at-home pack available for pick-up in the San Francisco Bay Area Shacks and all digital channels. Also, it is successfully expanding new and the existing partnerships with DoorDash, UberEats, Caviar, and Postmates for delivery.
Price Performance
Share of this Zacks Rank #3 (Hold) company have declined nearly 27% compared with the industry’s 12.3% decline. Estimates for fiscal 2020 have been revised to a loss of 41 cents from earnings of 40 cents in the past 30 days. The downside reflects rapidly evolving market conditions due to the pandemic. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Breakout Biotech Stocks with Triple-Digit Profit Potential
The biotech sector is projected to surge beyond $775 billion by 2024 as scientists develop treatments for thousands of diseases. They’re also finding ways to edit the human genome to literally erase our vulnerability to these diseases.
Zacks has just released Century of Biology: 7 Biotech Stocks to Buy Right Now to help investors profit from 7 stocks poised for outperformance. Our recent biotech recommendations have produced gains of +50%, +83% and +164% in as little as 2 months. The stocks in this report could perform even better.
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