MRT reported better than expected 4Q09 earnings yesterday and a -5.3% decline in same-store sales (on a comparable 13-week basis).  This -5.3% marks a significant improvement from the -16.8% in 3Q09.  Easier comparisons drove a lot of this improvement, but trends also got sequentially better on a 2-year average basis.  Comparable restaurant sales turned positive in December and have continued to get better since then (+1.5% in January and +4.4% in February to date).  Management said it is seeing increased business travel and as a result, improved Monday-through-Thursday business.  For reference, in the past, MRT has said that about 80% of guest checks are on expense accounts, but that mix has fallen off throughout this economic downturn.  MRT also said that in response to increased corporate spending, it experienced a pickup in holiday party bookings during the fourth quarter; though many businesses hosted lunch events in place of dinner events, lowering the holiday party average check. 


This increase in expense account dining at MRT supports PFCB’s expectation for marginally better business trends going forward (30% of tickets at the Bistro).  This also increases my conviction that we will continue to see a divergence in performance between casual dining and QSR names, particularly for those concepts that target higher income consumers.  Even after the most recent fall off in consumer confidence, confidence levels remain highest among consumers in the $50K+ income bracket.  The price action in the stocks, along with management commentary, has confirmed this thesis.




RESTAURANTS – DIVERGENCE BECOMING A TREND - consumer confidence income


As the Hedgeye Retail team said in our internal meeting this morning, February retail sales came in better than expectations across the board, but one of the biggest positive divergences came out of Nordstrom.  “Both Nordstrom and Neimans had solid months and although Saks missed relative to expectations, comps came in positive for the month, which is a victory in itself.”


Hedgeye’s Financial Analyst, Josh Steiner, also recently highlighted on February 25th following JPMorgan’s investor day that “The recovery is happening disproportionately at the high end of the income spectrum. The following chart shows that households with income greater than $125k spent +4.8% more in 4Q09 than in the prior year. This compares with +3.3% for families with between $75-125k and just +0.8% for those with less than $75k in household income.”



Who's Right? The Stock Market or the Bond Market?

"As I see it, bonds look like they have further to fall, while stocks look tenuous at these levels," writes Peter Atwater, founder of Financial Insyghts.

read more

Poll of the Day: If You Could Have Lunch with One Fed Chair...

What do you think? Cast your vote. Let us know.

read more

Are Millennials Actually Lazy, Narcissists? An Interview with Neil Howe (Part 2)

An interview with Neil Howe on why Boomers and Xers get it all wrong.

read more

6 Charts: The French Election, Nasdaq All-Time Highs & An Earnings Scorecard

We've been telling investors for some time that global growth is picking up, get long stocks.

read more

Another French Revolution?

"Don't be complacent," writes Hedgeye Managing Director Neil Howe. "Tectonic shifts are underway in France. Is there the prospect of the new Sixth Republic? C'est vraiment possible."

read more

Cartoon of the Day: The Trend is Your Friend

"All of the key trending macro data suggests the U.S. economy is accelerating," Hedgeye CEO Keith McCullough says.

read more

A Sneak Peek At Hedgeye's 2017 GDP Estimates

Here's an inside look at our GDP estimates versus Wall Street consensus.

read more

Cartoon of the Day: Green Thumb

So far, 64 of 498 companies in the S&P 500 have reported aggregate sales and earnings growth of 6.1% and 16.8% respectively.

read more

Europe's Battles Against Apple, Google, Innovation & Jobs

"“I am very concerned the E.U. maintains a battle against the American giants while doing everything possible to sustain so-called national champions," writes economist Daniel Lacalle. "Attacking innovation doesn’t create jobs.”

read more

An Open Letter to Pandora Management...

"Please stop leaking information to the press," writes Hedgeye Internet & Media analyst Hesham Shaaban. "You are getting in your own way, and blowing up your shareholders in the process."

read more

A 'Toxic Cocktail' Brewing for A Best Idea Short

The first quarter earnings pre-announcement today is not the end of the story for Mednax (MD). Rising labor costs and slowing volume is a toxic cocktail...

read more

Energy Stocks: Time to Buy? Here's What You Need to Know

If you're heavily-invested in Energy stocks it's been a heck of a year. Energy is the worst-performing sector in the S&P 500 year-to-date and value investors are now hunting for bargains in the oil patch. Before you buy, here's what you need to know.

read more