Guzman Y Gomez shares plunge on excessive US growth prices, gradual begin in Australia

By Sneha Kumar

(Reuters) -Mexican-themed quick meals chain Guzman Y Gomez reported annual revenue forward of expectations on Friday, however rising U.S. expansion-related prices and a subdued begin to the brand new enterprise yr in Australia despatched its shares down 21%.

Guzman y Gomez (GYG) made its ASX debut in June 2024, marking the most important itemizing in Australia in three years. Considered a bellwether for the nation’s IPO market, its efficiency can be seen as a yardstick for the quick-service restaurant trade.

The corporate posted an working lack of A$13.2 million ($8.48 million) for its U.S. division in 2025 and flagged that the losses are anticipated to widen and margins to come back below stress within the present fiscal yr because it embarks on growth within the higher Chicago space.

“This funding … is anticipated to offset ongoing enhancements within the profitability of current eating places, and in consequence U.S. losses are anticipated to extend barely in FY26,” the corporate stated.

Community gross sales in Australia rose 3.7% within the first seven weeks of the present enterprise yr, sharply decrease than the 7.6% development forecast for the primary half by Seen Alpha consensus.

Shares of GYG plunged 21% to a lifetime low of A$22.740, a couple of pips shy of their subject worth of A$22 apiece. The inventory marked its worst intra-day session on report.

Craig Sidney, a senior funding advisor at Shaw and Companions, estimates GYG is “extremely priced, so there’s a view that they have to realize very robust development to be able to substantiate the share worth”.

“So something that barely misses on this atmosphere is being offered down fairly closely.”

In Australia, sturdy demand for its in style breakfast menu lifted gross sales 22% to a report A$1.09 billion within the yr ended June 30, whereas gross sales in its secondary markets rose as nicely: up 40% in Singapore and 16% in Japan.

That propelled its full-year internet earnings to A$14.5 million, greater than double of the A$5.7 million it earned final yr, and forward of its personal and market expectations.

The corporate additionally introduced its first dividend payout of 12.6 Australian cents per share, citing robust stability sheet and money movement technology.

For the present enterprise yr, GYG forecast working earnings from its Australia section, which incorporates its operations in Singapore and Japan, to increase as much as 6.3%, in contrast with a 5.7% development in 2025.

($1 = 1.5567 Australian {dollars})

(Reporting by Sneha Kumar in Bengaluru; extra reporting by Sameer Manekar; Modifying by Alan Barona and Sherry Jacob-Phillips)