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 chalked the slowdown up to a number of factors, ranging from “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 2022, 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%.
Moreover, Sweetgreen also changed its outlook for adjusted losses 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 shared 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.
