Earnings of Sweetgreen (SG) Q4 2021

A Sweetgreen banner at the NYSE, November 18, 2021.

Source: NYSE

sweet green Thursday reported growing losses but strong fourth-quarter sales growth and promising performance at its restaurants in its first quarterly report since its initial public offering.

The salad chain has also issued good sales prospects for 2022, although it does not yet expect to make a profit.

Shares of the company were up 17% in extended trading. After a strong public market debut in mid-November, the stock struggled as investors question the company’s lack of profitability, a rarity for publicly traded restaurants.

Sweetgreen’s shares have lost more than 50% since debuting on the public market, dragging its market value to around $ 2.2 billion. The stock closed on Thursday roughly 11% lower before rising in sustained trading on the back of the results.

The chain reported a fourth-quarter net loss of $ 66.2 million, or $ 1.14 per share, compared with a loss of $ 41.1 million, or $ 2.49 per share, a year earlier. The company recorded a $ 21.5 million increase in stock-based compensation. Sweetgreen also said that rising prices and eliminating its loyalty program helped margins at the restaurant level, although higher wages and employee bonuses weighed on its bottom line.

Net sales it increased 63% to $ 96.4 million, exceeding expectations of $ 84.7 million, according to a survey of analysts from Refinitiv.

The chain saw same-store sales growth of 36% for the quarter. Over the period a year ago, the company saw its sales in the same store drop 28% as the pandemic strained the demand for its hot bowls and salads.

Most of the credit for the quarterly increase in sales at the same store comes from an increase in orders, although the chain also reported a 4% benefit from price increases.

Executives said the company has great pricing power, but they are wary of too high price hikes and fear of new customers. Co-founder and CEO Jonathan Neman previously said the company’s goal is to become the McDonald’s of his generation.

Sweetgreen said 65% of its sales came from digital orders. While impressive when compared to the broader restaurant industry, this marks a decline for the company, as over three-quarters of its transactions came from online orders during the one-year period.

“Once we get a customer on the line and they’re going digital, they’ll come back 1.5x more,” Neman said during the company’s earnings call.

He added that if customers shop from two different channels, like stores and online, they come back even more frequently.

This quarter, more customers chose to order through third parties such as DoorDash Other dig elevatorwho charge higher fees for pickup and delivery orders and can take advantage of Sweetgreen’s margins.

Looking to the first quarter, Sweetgreen said it expects revenue between $ 100 million and $ 102 million and same-store sales growth of 30% to 33%. It also expects adjusted losses before interest, taxes, depreciation and amortization of between $ 18 million and $ 20 million.

For the full year, Sweetgreen expects revenue between $ 515 million and $ 535 million and same-store sales growth of 20% to 26%. Wall Street expects the chain to see net revenue of $ 513.1 million in 2022, although analyst coverage on the stock is sparse.

The company expects to see adjusted losses before interest, taxes, depreciation and amortization from $ 33 million to $ 40 million for 2022. Executives said they expect food prices to rise 6% in 2022.

Sweetgreen also plans to open at least 35 new locations during the year.

Read the full earnings report here.

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