Shake Shack (NYSE: SHAK) shares tumbled early Tuesday after the company reported third-quarter earnings that beat analysts’ expectations, but turned in disappointing same-store sales growth.
Revenue was in-line with expectations, but same-store sales rose 2.0%, shy of the 2.5% growth analysts predicted.
New York-based SHAK also reported operating income of $8.2 million, or 5.2% of total revenue, which included the impact of costs associated with the Company's enterprise-wide system upgrade implementation, Project Concrete, and other one-time items totaling $1.4 million, resulting in a decrease of 12.6%.
Shack-level non-GAAP operating profit increased 17.4% to $35.1 million, or 23.1% of Shack sales.
Net income was $11.4 million and non-GAAP adjusted EBITDA, increased 9.1% to $23.3 million.
The chain also boasted 17 net system-wide Shack openings, comprised of 11 domestic company-operated Shacks and six net licensed Shacks.
General and administrative expenses increased to $17.1 million for the third quarter of 2019 from $13.2 million in the same quarter last year, driven by the Company's significant growth to date, paired with ongoing investment for future growth.
In addition, the Company set up its first international office in Hong Kong to support its licensed business in Asia. The Company also incurred costs of $1.4 million related to Project Concrete and other one-time costs during the quarter
According to CEO Randy Garutti, "We're pleased to report total revenue grew nearly 32% and the team delivered another quarter of positive Same-Shack sales of 2%, continuing to drive positive traffic of 1.2%. Based on our results to date, we are raising our 2019 revenue guidance, including our licensing revenue guidance."
SHAK shares slid $14.64, or 17.4%, to $69.61
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