Sweetgreen (SG) misses Q3 2022 earnings estimates, stocks fall

A worker wears a Sweetgreen Inc. hat while preparing food inside the company’s restaurant in Boston, Massachusetts.

Adam Glanzman | Bloomberg | Getty Images

Shares of sweetgreen fell 10% in after-hours trading on Tuesday after the salad chain reported a bigger-than-expected loss and lowered its full-year revenue outlook.

For 2022, the company now expects revenue to be at or below its previous range of $480 million to $500 million. This is the second consecutive quarter in which it has lowered its earnings outlook.

In the third quarter, Sweetgreen said same-store sales rose 6%, driven entirely by higher menu prices. On Monday, the chain announced the launch of its first national dessert in a bid to boost sales.

Sweetgreen executives said in August that the company’s sales began to decline around Memorial Day. They attributed the slowdown to a number of factors, including summer travel, delays in returning to the office and another wave of Covid-19 cases.

Other restaurant chains reported a larger change in consumer spending linked to high inflation. Chipotle Mexican Grill and McDonald’s executives told investors that higher-income consumers were spending more at their restaurants, while some lower-income customers dined out less often or bought less expensive food.

Sweetgreen reported a net loss of $47.4 million, or 43 cents per share, in the fiscal third quarter, higher than its net loss of $30.1 million, or $1.58 per share, a year earlier . Wall Street analysts polled by Refinitiv had expected a loss of 37 cents per share.

In August, Sweetgreen announced that it had laid off 5% of its support center workforce and planned to downsize to a smaller office building to save money. In the third quarter, it spent $11.1 million before taxes related to these restructuring costs. This figure includes $600,000 spent to abandon future restoration sites to streamline future development.

Net sales climbed 29% to $124 million, below expectations of $129.4 million. The chain also missed Wall Street estimates for same-store sales growth.

The stock has fallen 45% this year, as of Tuesday’s close, dropping its market value to $1.9 billion.

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