Moving BLMN Higher on the Position Monitor
Raising guidance on non-operating items while sales are slowing.
Bloomin’ Brands (BLMN) shares rose 13% last week after an upbeat forecast for restaurant demand into 2023. The strong start in January is a head-fake, and we do not believe in the BLMN story and, as a result, moved it higher on the Position Monitor. Management expects $2.90-$3.00 in adjusted earnings per share, well above the consensus of $2.70. However, the upbeat guidance includes a $0.25 favorable impact from Brazil tax legislation and a $0.14 positive impact from the 53rd week. They also said US comparable sales across brands are expected to rise 2%-4% in 2023, and commodity and labor inflation will rise in mid-single-digits. This acceleration in cops represents an acceleration from 4Q22, where they reported a big miss of US +1.4% vs. FactSet +4.4%, and the core Outback brand missed reporting +0.9% vs. FS +4.9%.
Restaurant Traffic Slowing
BLMN is underperforming industry trends
Supporting our bearish on BLMN above and the Casual Dining industry, we can see that industry traffic has turned negative in early February. More importantly, the traffic trends for BLMN's core concept Outback Steakhouse is decidedly underperforming the industry, with traffic down (-10.5%) in early February.
