Dutch Bros (NYSE:BROS) stock jolted upward in Wednesday’s after hours trading after notching a beat on top and bottom lines for Q3 and raising revenue guidance.
The Oregon-based coffee chain posted $0.09 in earnings per share alongside $198.6M in total sales. The Wall Street consensus on those metrics stood at $0.08 and $194.78M, respectively. Additionally, the company opened 38 new shops, 34 of which were company-operated, across 11 states in the quarter, accelerating nationwide expansion.
“In the third quarter, we opened a record 38 shops, grew our revenue by more than 50%, and once again expanded our company-operated shop gross margins quarter-over-quarter. For perspective, we opened almost as many shops this quarter as we did during the entire year of 2019 and have opened at least 30 shops in 5 consecutive quarters,” CEO Joth Ricci said. “Our new shops are fueling revenue growth, which increased 53.0% year-over-year to $198.6 million. Company-operated shop gross margins improved in the third quarter to 20.0%, 60bps higher than the second quarter and 720bps higher than the first quarter.”
He added that the company has been diligently fighting inflation via operational improvements and increased investment in higher margin shops within the overall portfolio. Based upon the continued expansion and strong performance of newly opened locations, he indicated that revenue is expected to reach at least $725M, up from a prior forecast of at least $715M. The analyst consensus stood at $724.33M.
“We expect to cap off our first full year as a public company by reaching our 2022 development target of at least 130 new shops,” Ricci added. “Based upon the availability of capable field leaders currently in our people development system and the total number of committed sites in our pipeline, we are targeting at least 150 new shop openings for 2023. This would enable us to reach 800 shops by the end of 2023, a goal we made as a private company five years ago when we had just 328 shops.”
Shares of Dutch Bros (BROS) rose over 6% shortly after the print before moderating gains to about 3.8% as of 4:45PM ET on Wednesday. The rise battles back from an over 9% decline marked in Wednesday’s regular session.
Read more on JP Morgan’s recent bull call on the stock.