Notable news items and price action over the past twenty four hours.
- Kraft’s lawsuit over Starbucks’ plan to end an exclusive distribution agreement will receive expedited review from the U.S. Court of Appeals for the Second Circuit. SBUX says that Kraft violated several provisions of the pact, like properly stacking shelves with its coffee, which allows it to end the deal. SBUX is trading well despite commodity pressure.
- GMCR gained on accelerating volume following strong earnings results after the close on Wednesday. This was a day in the sun for GMCR but SBUX, in my view, will take more and more of their market share as time goes on.
- CHUX reported its sixth straight quarterly loss as higher commodity and operating costs weighed on margins. 4Q revenue came in at $183.5m versus an expected $185m. The company guided to revenue of $260-$266m for 1Q versus consensus at $267.4m.
- DRI increasingly likely to buy a new chain over the next couple of years, according to Janney Capital Markets. California Pizza Kitchen, BJ’s Restaurants, and Yard House are three of the chains mentioned in the report. DRI might buy something, but not any time soon.
- BWLD appointed James Schmidt to the newly-created position of chief operating officer, with immediate effect.
- WEN is the best performing QSR stock over the past week and up every day since the analyst meeting on big volume.
- DPZ declined on accelerating volume. The stock received some publicity lately with SAC buying shares but we see three quarters of difficult top line compares and cheese prices up 33% YTD and 19% YoY.
- MCD releasing sales on 2/8. The company guided to 4-5% global same-stores sales. The USA continues to slow, Europe accelerated sequentially and APMEA slowed sequentially.
Howard Penney
Managing Director