DARDEN
DRI is to report 3Q23 EPS on 3/23.
- 3Q23 EPS of $2.25, up 16.4% YoY, on Revenues of $2.731B, up 11.5% YoY.
- Same-store sales of 9.1% and restaurant level margin of 20.5% flat YoY.
- Current 2023 EPS guidance of $7.60-8.00 (FactSet $7.88 up from $7.73 in 2Q23) vs. 2Q23 prior guidance of $7.40-8.00.
- 2023 Revenue guidance of $10.3-10.45B vs. prior guidance of $10.2-10.4B and FactSet $10.32B
- 2023 Comps guidance of +5-6.5% vs. prior guidance +4-6% and FactSet 5.0% (now 5.9%)
For DRI 3Q23 spanned DEC 2022 – FEB 2023 and represented a period when the Knapp Track same-store sales grew +9.8% -- partially boosted by lapping easy Omicron comparisons in January. During the course of the quarter, the DRI FY23 SSS estimate has moved higher by 90bps since the company last gave guidance on 12/16/22. Sales did accelerate in January but slowed in February and remained soft in early March, suggesting that the commentary coming out of the quarter will not be as bullish as it was in December 2022. While DRI has outperformed Knapp over the past year, we would not that a little over 20% of the company store base is in Florida and Texas, which is significantly underperforming Knapp. Commentary about the trends in food inflation will dominate the earnings discussion are sales slow.
Lastly, OG's traffic trends are up against very difficult comparisons in March and April.
Oatly & MCD
Oatly Group AB (OTLY) announced a new partnership with McDonald’s to bring its products to McCafe locations across Austria. The Swedish dairy alternative provider said that its products would be available across locations starting this month. Specifically, Oatly’s Barista Edition will be offered at locations across the Central European country. "We’re excited to partner with McDonald’s Austria and commend their commitment to providing their guests with great-tasting drink options that are better for the planet,” says Roland Griesebner, Country Manager of Austria at Oatly. “For Oatly, our partnership with McDonald’s Austria allows us to introduce our best-selling product to a wider audience.”
Obvious timing change
SBUX is fighting a growing wave of unionization under Schultz's leadership. Since Schultz rejoined the company as interim CEO in April of last year, and even before, he has said repeatedly that he doesn't think Starbucks workers should unionize.
Starbucks (SBUX) announced that its new CEO Laxman Narasimhan had assumed the role today and will join the company’s board of directors. Narasimhan was named incoming CEO on September 1, 2022, succeeding former CEO Howard Schultz. Narasimhan joined the company as the incoming CEO on October 1, 2022, and was expected to assume the role of CEO on April 1 of, 2023. “Laxman’s intensive immersion into the business coupled with his extensive experience as a proven brand builder, innovator, and operator have uniquely prepared him to lead Starbucks into its next phase of growth,” said Hobson. The company said two weeks ago that "interim" CEO Howard Schultz will testify before a Senate committee about the company's labor practices on March 29, a reversal of Schultz's previous refusal.
I suspect that the preparation work to prepare for his testimony led the company to make this change, so he is not speaking as CEO of SBUX.
