(Bloomberg) -- Shares of Guzman y Gomez Ltd. rose after the Mexican-themed fast-food chain beat its profit forecast, though its retained guidance disappointed some investors following the stock’s blockbuster debut.
The shares gained 3.2% on Tuesday, closing at the highest price since their June 20 listing after GYG reported pro forma net profit after tax of A$5.7 million ($3.9 million) for the 12 months ended June 30, exceeding its prospectus target. Same-store sales growth in the first seven weeks of the current financial year topped expectations at 7.4%, partly on demand for healthy food options and value menu items, the Sydney-based eatery said in a statement.
Still, its shares spent most of the session in negative territory, dropping as much as 9.2% after the company’s unchanged guidance underwhelmed traders who were betting on an upsized outlook. GYG said it expects to achieve its prospectus forecasts for the current financial year.
The profit result and a strong start to same-store sales growth this year “represents encouraging momentum in the business,” Wilsons Advisory analyst James Ferrier wrote in a note. “GYG has established a domestic store network with very attractive unit economics and sufficient scale to support expectations of a significant and successful full store rollout,” he wrote.
GYG shares have climbed almost 70% since their debut. They were sold at A$22 apiece in an initial public offering and rocketed 36% on the first day of trading, posting the biggest gain for an Australian IPO debut larger than $100 million since 2021, according to data compiled by Bloomberg.
Read: Guzman y Gomez Posts Best Big Australia IPO Debut Since 2021
Customers aged 18 to 35 are driving growth at the chain, Co-Chief Executive Officer Steven Marks said in a Bloomberg Television interview Tuesday. “We have a very young demographic coming in” and are seeing people trading down from restaurants to fast food, which is helping GYG, he said.
Breakfast offerings, which make up 6% to 7% of sales, are also a focus area, Marks said on an investor call.
He owns a 9.6% stake in GYG, worth A$326 million as of Tuesday’s close and up from about A$194 million when the stock floated, according to Bloomberg-compiled data.
--With assistance from Andrew Heathcote, Carmeli Argana and Haidi Lun.
(Adds closing share prices, update throughout)
©2024 Bloomberg L.P.
