Shake Shack | $SHAK Stock | Shares Fall After Same-Store Sales Drop

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Shake Shack

Shake Shack Inc. (NYSE: SHAK)

 

 

Shake Shack, the New York based restaurant chain which opened in 2004 labeled as what’s called “fast-casual” dining reported their quarterly earnings on Thursday May 4, 2017 after the close of trading at 4pm EST.

The company started out as a mobile food cart in Madison Square Park. Because of  it’s huge popularity as well as enormous customer satisfaction and attraction, it morphed into a regular fixed-food stand within the park.

They then expanded the menu to include hotdogs and fries to join the hugely popular 100 % angus beef hamburgers and thick fulfilling shakes. A public offering of stock in the company was a huge success in 2014 going from the IPO price of $21 to $47 by the end of its first day of trading on the NYSE.

Today the shares were down fractionally closing at $32.44  down $0.91 on the day. However by 8 p.m. shares had gone down to $32.44 down an additional to 2.05 %.

 

SHAK Numbers

Fortunately for Shake Shack, some of their earnings figures were actually pretty good; however it was the same-store sales drop that actually sacked the company’s share price in after-hours trading. Shares did get hit in the aftermarket session but not as severely as they  would have if  all of the sales and revenues numbers came in as terrible.

The good- revenues increased 41.7%, Shack sales increased 42.2% and operating income increased 19.4%. The bad – same-store Shack sales decreased 2.5%. Some of the increases were attributed to new Shacks that were opened during the quarter driving up revenues and some sales figures.

 

Conference Call Comments

Randy Garutti, Chief Executive Officer of Shake Shack, had this to say,

“We’re proud of our nearly 42% total revenue growth and 29% Adjusted EBITDA growth in the first quarter, adding 13 new system-wide Shack openings. New company-operated Shack growth represented approximately $24 million of increased revenue this quarter, offset by a decrease in same-Shack sales. We are clearly dissatisfied with our comp result in Q1, but as a reminder our small comp base is made up of only 32 Shacks, the majority of which exist in the Northeast region which was most affected by cold weather and the holiday shift in March. Looking into the remainder of the year, we’re increasing our development schedule and overall revenue expectations, despite the relatively small impact the comp base has on the overall Shack story. We remain committed to executing our strategy of growing in premier locations, investing in our teams and delivering a great guest experience. We are extremely pleased with the early results of the Shack App and this is a key component of our long-term strategy to meet our guests whenever and wherever they want their Shack.”

 

The Technicals

Shake Shack
Shake Shack Chart

In the above chart you will see two price levels indicated by one green and one red line. This is called a price channel and you will notice how prices have bounced off  both of them going back for the last eight months or so.

The interesting and good thing for investors is that even with the sell-off in the after market, shares look like they will likely respect that lower green support line. We will have to see how shares trade after they open and get active on Friday.

 

Company Profile

Shake Shack Inc. operates roadside burger stands. The Company serves an American menu of burgers, hot dogs, crispy chicken, frozen custard, crinkle cut fries, shakes, beer and wine, among others. The Company’s signature items are its all-natural, hormone and antibiotic-free burgers, hot dogs, crispy chicken, crinkle cut fries, shakes and frozen custard. Its menu focuses on food and beverages, crafted from a range of classic American foods.

The Company’s domestic menu includes a range of signature items, such as the ShackBurger, SmokeShack, Shack-cago Dog, ‘Shroom Burger, seasonal frozen custard, hand-spun shakes, concretes, ShackMeister Ale, and Shack Red and Shack White wines. As of December 28, 2016, it had 114 Shacks in 13 countries and 16 states, as well as the District of Columbia.

Its burgers are made with a whole-muscle blend of all-natural, hormone and antibiotic-free Angus beef, ground fresh daily, cooked to order and served on a non-genetically modified organism potato bun-GoogleFinance

 

 

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