March 12, 2015 / 12:05 AM / 3 years ago

Shake Shack says comparable sales growth likely to slow in 2015

(Reuters) - Shake Shack Inc (SHAK.N) forecast slowing same-restaurant sales growth in 2015 and swung to a fourth quarter loss, sending the hamburger chain’s shares up to 9 percent lower on disappointment over its first quarterly report as a public company.

People walk past Shake Shack in New York January 30, 2015. REUTERS/Andrew Kelly

New York City-based Shake Shack, which began as a hotdog cart in the city’s Madison Square Park, reported same-restaurant sales rose 7.2 percent in the fourth quarter, beating the average analyst estimate of 4 percent, according to research firm Consensus Metrix.

But the company that gained a near cult following for its rich milkshakes, crinkle fries and hormone- and antibiotic-free burgers, said it expected 2015 same-restaurant sales growth to be in the low-single-digit percentage range. Sales at Shacks open at least two years grew 4.1 percent in the year ended Dec. 31.

“We don’t believe that over the long term the same-shack sales growth we experienced in the fourth quarter is sustainable,” Chief Executive Officer Randy Garutti said on a post-earnings conference call.

Shares of the company were down 5.1 percent at $44.50 in after-market trading on Wednesday. Up to Wednesday’s close of $46.90, the stock had risen 123 percent from its IPO price of $21 on January 30.

The company’s shares debuted on the New York Stock Exchange at more than twice their offered price, buoyed by growth-hungry investors hoping the burger chain would replicate the red-hot run of industry darling Chipotle Mexican Grill Inc (CMG.N).

But repeating Chipotle’s success has proven elusive for most restaurant operators, and it could be even harder to do in the crowded and competitive high-quality burger segment.

    “Expectations are too high,” David Louton, a professor of corporate finance at Bryant University told Reuters.

    The company swung to a loss of $1.4 million, or 5 cents per share, in the quarter ended Dec. 31, from a profit of $997,000, or 3 cents per share, a year earlier.

    Shake Shack attributed the loss to a $1.1 million after-tax charge related to its IPO.

    Revenue rose 51.5 percent to $34.8 million.

    Reporting by Ramkumar Iyer in Bengaluru; Editing by Simon Jennings and Andrew Hay

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