Dutch Bros stock dives in reaction to forward guidance

Dutch Bros (BROS) stock is plummeting by as much as 25% Thursday morning after the drive-through coffee chain shared disappointing forward guidance pertaining to its sales growth and unit growth outlooks.

Yahoo Finance senior reporter Brooke DiPalma explains Dutch Bros's slowing same-store growth forecast in contrast with its second quarter earnings results, noting the company's full-year plans for new location openings and pricing projections.

Catch up on Brooke DiPalma's inside look into Dutch Bros's coffee shop operations:

Fizzy drinks, energetic 'broistas' are fueling Dutch Bros' rise as the next big coffee chain
Dutch Bros. is gunning for Starbucks' top coffee spot

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This post was written by Luke Carberry Mogan.

Video Transcript

Let's move on to some of our trending tickers starting out with Dutch bros. Those shares plunging down over 25% after its forward guidance came in below expectations.

Yahoo Finances, senior reporter Brooke Dipalma has the breakdown for us on set.

And Brooke, I thought of you immediately with this because you did such a deep dive into Dutch bros and the company talking to so many people within the firm for months.

What did you expect heading into earnings and, and what can you tell us about this print and why it is so negative for them?

Yeah.

Well, let's be clear.

It was a solid quarter.

We did see same source sales growth up 4% but after such momentum for the company, some even comparing it to be the next Starbucks that forward guidance was a disappointment for the street here.

And as you could see that's translating the shares down roughly 25% this morning.

Now, uh forward guidance, two areas that investors are really focusing on is that sales growth outlook and unique growth outlook.

The company reiterated same same source sales growth, same shop sales growth that calls it's expected to remain in the low single digits.

And Wall Street was really hoping for more after seeing 10% sales grow now, 4% Wall Street sort of saying, hey, in the second half, you're not going to see that Momentum Bank of America analyst Sarah San to calling it highly conservative.

And there's three factors that really drove Dutch decision to reiterate that same source sales guidance that includes the roll off of price increases in Q three, that's gonna be roughly 4% in addition to your rear increase in promotional activity and really this uncertain macro environment that we're seeing.

Now.

The other factor here that investors are really focusing in is that total system shop open openings in 2024 are now expected to be at the lower end of the previously communicated range of 100 and 50 to 100 and 65.

The reason behind that is the company did remove sites from its pipeline that were set to open this year that they say didn't meet new objectives.

It has now set for the real estate strategy.

Moving forward, the company does still anticipate 4000 shops in the next 10 to 15 years.

And Wall Street saying here that they view this as a one time adjustment and expect growth to re accelerate next year.

Now, other drivers include mobile order paid advertising innovation and digital offerings.

Those are some key growth drivers that Wall Street is really looking to pick back up momentum in this later half of this year in this environment where consumers are really nickel and diming, I guess you could say.

Yeah, we're certainly seeing that impacting, uh, one of their big competitors, which is the Starbucks of it all.

So, uh, really interesting points there, Brooke, thank you so much for joining us.

Appreciate it.