What happened
Shares of Sweetgreen (SG 7.73%) were sliding today after the fast-casual salad chain posted another disappointing earnings report.
As of 12:02 p.m. ET, the stock was down 9.5%.
Image source: Sweetgreen
So what
Sweetgreen posted same-store sales growth of 3% in the second quarter, though price increases contributed 4% and traffic/mix fell 1%. Overall revenue jumped 22% to $152.5 million as the company benefited from new store openings, but that was short of estimates at $156.7 million.
Average unit volumes were $2.9 million, flat with a year ago, but showing its restaurants remain popular. Restaurant-level operating profit jumped 34.6% to $31.1 million, and restaurant-level operating margin improved from 19% to 20%.
It also flipped an adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) loss of $7.8 million in the quarter a year ago to a profit of $3.3 million, recording its first quarter with positive EBITDA.
On a generally accepted accounting principles (GAAP) basis, the company posted a loss of $0.24 per share, compared to a $0.37 loss in the quarter a year ago, which was also worse than estimates at a loss of $0.16.
CEO Jonathan Neman said:
As we entered 2023, we doubled down on our commitment to durability -- balancing high growth and profitability -- and our second quarter performance put that commitment into action. In the second quarter, we recorded our ninth consecutive quarter of over 20% sales growth year over year. We delivered a restaurant-level margin of over 20% as well as achieved adjusted EBITDA profitability of $3.3 million.
Now what
The company maintained its top-line guidance for the year, calling for revenue of $575 million to $595 million, compared to the consensus at $590.3 million, and same-store sales up 2% to 6%. It also modestly raised restaurant-level profit margin from 15%-17% to 16%-18%, and improved its EBITDA forecast to a loss of $10 million to breakeven.
While the margin improvement was a good sign, the company still has a long way to go to GAAP profitability and the decline in traffic is a concerning sign. That seems to explain the stock's decline today.
