Soho House Q3 Loss Widens, Faces Setback

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Soho House & Co. Inc. (stock symbol SHCO) experienced a significant blow as its third-quarter financial results fell short of expectations. The London-based operator of member clubs and hotels saw its stock plunge by 3.6% on Friday morning following the announcement.

Disappointing Financials

Despite the company’s attempts to improve its performance, Soho House reported a net loss of $42.4 million, or 22 cents per share, for the quarter. Although this is narrower compared to the loss of $91.7 million, or 46 cents per share, incurred during the same period last year, it still fell below analysts’ projections.

Furthermore, while revenue did experience a positive uptick, rising from $266.0 million to $300.9 million, it failed to meet the consensus estimate of $306.0 million.

Membership Growth Slightly Slows

Soho House did manage to increase its membership base throughout the quarter, albeit at a slightly slower pace. Membership grew to 225,252 in the third quarter, showcasing a 20.8% rise compared to the same period in the previous year. However, it is worth noting that this figure reflects a decrease from the second quarter’s tally of 248,071 members.

Expanding Across Borders

In an effort to broaden its reach, Soho House opened its first club in Latin America, Soho House Mexico, during September. Looking ahead, the company has plans to launch additional clubs in Portland and Sao Paulo, Brazil by the end of this year.

Revised Outlook

Despite the setback in Q3, Soho House remains optimistic about its future prospects. The company now projects that total membership will surpass 192,000 for fiscal year 2023, an increase from its previous guidance of 191,000 members.

Additionally, Soho House adjusted its revenue forecast to range between $1.13 billion and $1.16 billion, compared to the previously stated range of $1.12 billion to $1.19 billion.

Market Performance

Soho House went public earlier this year, debuting at $14 per share. However, the stock closed at $8.15 on Thursday, representing a 119% gain for the year thus far. Meanwhile, the broader market index, S&P 500 (symbol SPX), has gained 13%.

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