Shake Shack swung to a quarterly loss and announced the appointment of a new chief financial officer, sending its shares down 20% in after-hours trading on Wednesday. The burger chain reported a net loss of $5.2 million for the first quarter, compared with a profit of $3.1 million a year earlier. Revenue rose 12% to $245.6 million, but missed analysts' expectations of $250 million.
New CFO Appointment
The company named former Yum! Brands executive Katherine J. Smith as its new CFO, effective June 1. She replaces former CFO Tara E. Comonte, who left to pursue other opportunities. Smith brings extensive experience in the fast-food industry, having previously served as CFO of KFC's U.S. division.
Market Reaction
Investors reacted negatively to the earnings miss and the leadership change. Shares fell 20% in extended trading, erasing gains made earlier this week. Analysts cited concerns about rising costs and slowing demand as consumers tighten spending amid inflation.
"The quarter reflects a challenging operating environment," said CEO Randy Garutti in a statement. "We are taking steps to improve efficiency and drive long-term growth, including strengthening our leadership team."
Shake Shack has been expanding rapidly, opening 15 new locations in the quarter, but same-store sales grew only 1.2%, below the 2.5% forecast. The company also cited higher labor and food costs as headwinds.
Despite the loss, Shake Shack reiterated its full-year outlook, projecting revenue between $1.05 billion and $1.07 billion. The stock has declined 35% this year, reflecting broader concerns about the restaurant sector.
