THE HBM: MCD, CMG, DPZ, CBRL, CAKE

THE HEDGEYE BREAKFAST MONITOR

 

HEDGEYE VIRTUAL PORTFOLIO POSITIONS

 

LONGS: JACK, SBUX

 

SHORTS: DNKN, MCD

 

MACRO NOTES

 

U.S. retail sales fell 1% for the week ended April 14th, according to the ICSC-Goldman Sachs weekly retail sales report.  This was the first decline in three weeks.

 

Commentary from CEO Keith McCullough

 

Trying to be on vaca w/ the family this wk – updates will be short:

  1. JAPAN – the Nikkei was down for the 9th of the last 10 trading sessions last night, taking its correction from the March YTD top to -7.7%; Asian equities were generally weak w/ the exception of India who reverted to the broken playbook, cutting rates.
  2. SPAIN – you learn the most about bear markets on the bounces – this morning’s in Spanish Equities on no-volume tells you all you need to know as people keep focusing on last year’s game (bond auction yields); its now all about the economic gravity of the situation and the IBEX needs to close > 7585 to recapture its 1st line of support. France and Italy don’t look much better.
  3. COPPER – we continue to see Bernanke’s Bubbles in commodities popping. On the commodities bounce this morn, Copper is down again and remains in a bearish formation alongside 10yr UST yields < 2.03% at 1.99% last.

Immediate-term risk range for SP500 = 1

KM

 

SUBSECTOR PERFORMANCE

 

THE HBM: MCD, CMG, DPZ, CBRL, CAKE - subsector

 

 

QUICK SERVICE

 

MCD: McDonald’s has appointed Tim Fenton as Chief Operating Officer, effective July 1.  Fenton is a veteran of McDonald’s since 1973 and takes over Don Thompson’s seat as Thompson transitions to his new role as Chief Executive Officer. 

 

CMG: Chipotle’s purchasing manager for meats and dairy, Doug George, said that beef prices will probably climb by the end of the second quarter as supplies of cattle tighten in the U.S.  

 

DPZ: Domino’s is featured in an article in the Wall Street Journal detailing the company’s “take me as I am” approach to emerging markets, even those markets where competition is tough and its product is not a consumer favorite.  We do not see this approach as very logical but will be looking for more commentary from management on its strategy in China, Russia, Brazil, and other markets going forward.


 

NOTABLE PERFORMANCE ON ACCELERATING VOLUME:


COSI: Cosi seems to have a problem – the stock dipped 10% on accelerating volume yesterday.

 

SBUX: Starbucks also dropped back below $60, declining 3.3% on accelerating volume.

 

 

CASUAL DINING

 

CBRL: Cracker Barrel announced that it has restructured and streamlined its field organization to better align its restaurant and retail operations under central leadership.  As a result, the company has fired 20 people and is taking a charge of roughly $0.05 per share.

 

CBRL: Cracker Barrel named Laura Daily Senior Vice President of Retail today.  Daily will join thecompany on May 7th.  Most recently, she served as Vice President for Ballard Designs, an internet and catalog home furnishings retailer that is part of HSN, Inc.

 

CAKE: Today’s ICSC data point, -1% for the week ended April 14th, was a negative for Cheesecake Factory.  The chart below shows CAKE’s comps versus the ICSC Chain Store Sales year-over-year change.  The expected comp for 1Q12 could be slightly aggressive, given the drop in the ICSC Chain Store Sales Index over the same period.

 

THE HBM: MCD, CMG, DPZ, CBRL, CAKE - cake comps vs icsc

 

THE HBM: MCD, CMG, DPZ, CBRL, CAKE - stocks

 

 

Howard Penney

Managing Director

 

Rory Green

Analyst

 


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