- March 28, 2024
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Investors are losing their appetite for Bloomin' Brands, one of the largest companies on the Gulf Coast, after a tough third quarter earnings statement.
Bloomin' Brands, with holdings that include Bonefish Grill, Carrabba's Italian Grill, Fleming's Prime Steakhouse & Wine Bar and Outback Steakhouse, has seen its stock fall for much of 2015. After reaching a 52-week high in March, at $26.25, the stock has steadily dropped and in November reached a new 14-month low, falling below $17 for the first time since September 2014. Shares, traded on the Nasdaq under the symbol BLMN, closed at $16.36 Nov. 10.
The problems start with sales.
For starters, sales fell 3.7% in the third quarter ended Sept. 27, from $1.06 billion to $1.02 billion. And three of Bloomin's four brands reported decreases in same-store sales, with Outback the only one on the positive side, albeit barely, at a 0.1% increase. Overall same-store sales fell 1.3%.
Bloomin' Brands CEO Liz Smith attributes the sales drop to a downturn in the casual-dining dinner market, which saw an overall traffic decline of 3% this summer. Weekend traffic was even worse and fell by 6%.
“Our company remains primarily a dinner business that skews more towards the weekend than it does for the industry,” Smith says in an earnings call. “So this dynamic of dinner and weekend traffic declines has been particularly noticeable over the past two quarters.”
Despite the poor performance, Smith is optimistic about a turnaround.
That includes an “aggressive, multi-year rollout” of a new design for the Outback brand, Smith says. The new design was tested in 33 locations and costs between $300,000 and $400,000 a store. In tests, the design generated average sales growth of 5%.
Bloomin' Brands, which had $4.4 billion in sales last year, also plans to capitalize on a technology-dominant economy, starting with an Outback app to simplify the payment process for customers. “Technology is an area where we will continue to invest ahead of growth,” Smith says.