Guzman y Gomez shares plunge as US sales disappoint

By Nichiket Sunil, Sameer Manekar and ‌Kumar Tanishk

Feb 20 (Reuters) - ​Mexican ​fast-food chain Guzman y Gomez's ASX-listed shares slumped to a record low on Friday, as investors ignored a half-yearly profit beat for disappointing ‌U.S. sales.

GYG shares closed down nearly 14% at A$17.53, making it one ⁠of the biggest drags on the benchmark S&P/ASX 200 index, which was 0.1% down. It had ‌earlier slumped as much as 16.5% ‌to A$17.

The firm reported net profit after tax of A$10.6 million ($7.46 million), higher than last year's A$7.3 million and beating the Visible Alpha consensus of A$9.2 ​million. The company expects U.S. losses to increase slightly in the year to June from A$13.2 million last year.

Hayden Beamish, portfolio manager at Endeavor Asset Management, ⁠called the earnings beat "noise".

The company's appeal to investors has rested on its potential to crack the U.S. fast‑casual market. ​It was a central part of its 2024 IPO pitch, which priced the stock at A$22 with a valuation of A$3 billion, ​leaving the stock vulnerable when its American momentum ‌falters.

GYG’s valuation has always depended on a successful U.S. expansion, and without clear progress there, investors feel they’re paying a growth ⁠multiple for what is essentially an Australian fast‑food chain, said Beamish.

GYG also flagged short-term U.S. sales momentum pressure after it shifted to Uber Eats from DoorDash.

U.S. sales jumped 67% to A$8.2 ⁠million ($5.77 million) in the first half, below Visible Alpha's consensus of A$9.2 million. Inclement weather in ​the greater Chicago area in the December quarter also hurt comparable sales growth.

Considered a gauge of sentiment toward Australia's quick‑service restaurant sector, the company's local segment, its biggest contributor to sales, reported ‌a 17.5% sales increase to A$673.6 million, and forecast full-year profit margins of up to 6.2% from 5.7% last year.

Group network ‌sales jumped 18% to A$681.8 million, missing the Visible Alpha consensus of A$687.3 million.

The company ⁠declared an interim dividend of 7.4 ‌Australian cents per share.

($1 = ​1.4209 Australian dollars)

(Reporting by Sameer Manekar and Nichiket Sunil in Bengaluru, additional reporting by Kumar Tanishk; Editing by Jonathan Ananda, Maju Samuel and ‌Harikrishnan Nair)

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