Shares of Sweetgreen plunged more than 20% in extended trading Tuesday after the salad chain lowered its 2022 forecast.
The restaurant company also said it laid off 5% of its support center workforce and will downsize to a smaller office building to lower its operating expenses.
As of Tuesday’s close, Sweetgreen’s stock has fallen 37% since its initial public offering in November.
Here’s what the company reported compared with what Wall Street was expecting, based on a survey of analysts by Refinitiv:
- Loss per share: 36 cents, in line with estimates
- Revenue: $124.9 million vs. $130.2 million expected
Sweetgreen sales softened around Memorial Day, leading the company to revise its forecast lower, CFO Mitch Reback said in a statement.
On the company’s conference call, executives attributed the slowdown to a number of factors, including “unprecedented levels of summer travel,” a slow return to the office and another wave of new Covid-19 cases.
In the quarter, ended June 26, Sweetgreen’s net sales rose 45% to $124.9 million. Its same-store sales climbed 16%, boosted by 6% menu price hikes.
For the year, Sweetgreen now expects annual revenue of $480 million to $500 million, down from its prior forecast of $515 million to $535 million. The chain also revised its outlook for same-store sales, predicting growth of 13% to 19%, down from the previous projection of 20% to 26%.
“We think that it’s a conservative estimate, but looking back, we’ve just been wrong on so many of these calls,” Reback said on the call.
Moreover, Sweetgreen also changed its outlook for adjusted loss before interest, taxes, depreciation and amortization to a range of $45 million to $35 million, wider than its previous range of $40 million to $33 million.
But the chain explained the steps it’s taking to achieve profitability, including layoffs and reducing its real estate footprint by moving to a smaller office. Severance packages and related benefits are expected to cost the company between $500,000 to $800,000, while the office move will cost $8.4 million to $9.9 million. The charges are expected to impact its third-quarter results.
Sweetgreen reported a second-quarter net loss of $40 million, or 36 cents per share, wider than a net loss of $26 million, or $1.55 per share, a year earlier. The company blamed an increase in stock-based compensation for its increasing losses.
Read the full earnings report here.
Correction: A previous version of this story misstated Sweetgreen’s previous forecast for its same-store sales growth.