Noodles & Company is in danger of being delisted from the Nasdaq Global Select Market because its stock price has dipped too low for too long.
The Broomfield, Colorado-based fast-casual chain received a notification letter on Dec. 24, according to filings with the U.S. Securities and Exchange Commission. The letter notes that the chain is not in compliance with rules that require listed securities to maintain a minimum closing bid price of $1 per share. Prior to the notice, Noodles’ closing bid price for the company’s common stock was below that price for 30 consecutive business days.
The company has 180 calendar days, or until June 23, to regain compliance. To do that, Noodles’ common stock must be at least $1 per share for a minimum of 10 consecutive business days during the grace period, though the company can seek a 10-day extension. And there is another opportunity to reach compliance after that if the company transfers to The Nasdaq Capital Market.
Noodles, in the filing, said it would consider all options for regaining compliance, including proposing a reverse stock split to shareholders, if necessary.
A delisting can be tough on publicly traded companies because they are then traded over the counter. That makes it more difficult for investors to purchase the stock. It also makes it tough for companies to issue new shares.
It was a rough 2024 for the 471-unit pasta concept, which is attempting a turnaround under Drew Madsen, who was named CEO in March.
Madsen has focused on the menu, pledging to update or replace two-thirds of the chain’s offerings. But the turnaround has also included plans to close underperforming locations and job eliminations in the central support office.
Still, those efforts do not appear to be taking hold. Noodles’ systemwide same-store sales dropped 3.3% in the third quarter, including a 5.8% decrease in traffic at company locations. Madsen blamed an unexpected decline in third-party delivery sales because of menu markups and said the company is working on tweaking its pricing strategies.
In early December, Noodles’ stock price was down about 80% for the year, and down nearly 89% over the past five years.
The company said same-store sales are expected to decline for the fiscal year, projecting a range between negative 3% to negative 1.5%.
By midday Thursday, the first day of trading in the new year, Noodles’ stock was priced at 61 cents per share, up more than 5% for the day, but near its low of 55 cents per share over the past 52 weeks.
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