Dutch Bros. Stock Spills 37% Lower after Forecast Cut Due to Inflation

Executives chop profit guidance, now say they expect no growth in same-store sales this year; shares head lower than IPO price for first time since coffee chain went public last fall

Dutch Bros. Inc. reported first-quarter earnings Wednesday. BLOOMBERG NEWS

After its third quarterly earnings report since going public, coffee chain Dutch Bros. Inc.'s shares were slaughtered in late trading Wednesday after executives revised their annual outlook to predict less profit this year amid record inflation.

Dutch Bros. (BROS) lost $16.3 million, or 10 cents a share, in the first quarter, compared with a loss of $4.8 million in the same period of 2021. Adjusted for one-time items, Dutch Bros. lost 2 cents a share. Revenue of $152.2 million beat estimates while growing from $98.8 million a year ago.

Analysts polled by FactSet on average projected adjusted earnings of a penny a share on sales of $145.5 million.

The stock plummeted more than 37% in after-hours trading following the results, though that likely had more to do with the forecast than the first-quarter performance. Executives now expect "at least $90 million" in adjusted Ebitda for the year, after stating a target range of $115 million to $120 million just three months ago.

"We were not immune to the record inflation that surpassed our expectations and pressured margins in our company-operated shops," Chief Executive Joth Ricci said in a statement. "While we believe these margin impacts may be short term, we have opted to take a more conservative stance regarding adjusted Ebitda for 2022 as we monitor our pricing and the escalating cost environment."

Executives also reduced their target for same-store sales, a metric that removes performance of new stores, which is especially important for chains growing rapidly like the drive-through coffee franchise. After predicting same-store sales would rise "in the mid-single digits" this year previously, executives chopped that forecast to zero growth at existing stores for 2022.

Dutch Bros. shares sold for $23 in their initial public offering last fall, and have never closed lower than $34.37, their closing price on Wednesday. In after-hours trading Wednesday, shares were dipping below the IPO price.