Dutch Bros Stock Hits New Low as Inflation Keeps Younger Consumers Away

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The coffee chain cuts its sales outlook for the year as shares fall below IPO price

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The lowered view came as the company reported a first-quarter loss of $4.9 million. The main culprits included rising dairy prices that pressured margins and rising inflation cutting into disposable income.

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Higher prices are weighing heavily on younger consumers, Dutch Bros Chief Executive Joth Ricci said, a cohort that typically visits the growing chain in the afternoon. Mr. Ricci said the company plans to play up its energy-drink offerings and highlight its rewards program to draw the younger crowd back in.

“I continue to think that it’s our biggest opportunity as a segment,” Mr. Ricci said.

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The Oregon-based company sells coffee and energy drinks at locations primarily in the Western half of the US It had nearly 600 locations as of March 31, after opening 34 in the first quarter, and aims to open at least 4,000 stores over the next 10 to 15 years.

The added stores helped revenue rise 54% in the first quarter, as same-store sales rose 6%.

Dutch Bros went public in September at $23 a share. The stock soared as high as $80 but is down more than 53% since the start of the year. It was down 31% at $23.57 around midday after earlier dipping below its IPO price.

For the first quarter, Dutch Bros reported a loss attributable to the company of $4.9 million, or 10 cents a share, wider than the year-earlier period and the average analyst estimate on FactSet,

In addition to a 25% increase in dairy prices, the company said its bottom line took a hit from a rising minimum wage in some markets and other costs associated with its growth.

Revenue came in at $152.2 million, ahead of analyst expectations of $146 million.

Dutch Bros on Wednesday backed plans to open at least 130 stores this year. They reduced the low end of its expected adjusted earnings before interest, taxes, depreciation and amortization to $90 million from prior guidance of $115 million, reflecting margin pressures and a decision to raise prices.

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Credit: www.wsj.com /

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