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Bloomin Brands Inc (BLMN) Reports Mixed Q4 Results Amidst Strategic Closures and Share ...

  • Revenue: Total revenues increased by 9.1% to $1,194.2 million in Q4 2023.

  • EPS: Q4 diluted EPS was $0.45, down from $0.61 in Q4 2022, while adjusted diluted EPS rose to $0.75 from $0.68.

  • Operating Margins: GAAP operating income margin declined to 4.8%, while adjusted operating income margin decreased slightly to 7.5%.

  • Restaurant Performance: Restaurant-level operating margin saw a minor improvement to 16.4%.

  • Comparable Sales: U.S. combined comparable restaurant sales slightly down by 0.2%; International Outback Steakhouse in Brazil up by 0.6%.

  • Dividends and Share Repurchases: A quarterly cash dividend of $0.24 per share declared and a new $350 million share repurchase program announced.

  • 2023 Closure Initiative: Decision to close 36 underperforming restaurants, with expected Q1 2024 charges of $8 million to $11 million.

On February 23, 2024, Bloomin Brands Inc (NASDAQ:BLMN) released its 8-K filing, detailing the financial outcomes for the fourth quarter of 2023 and the full fiscal year. The company, known for its portfolio of casual dining restaurants including Outback Steakhouse, Carrabba's Italian Grill, Bonefish Grill, and Fleming's Prime Steakhouse & Wine Bar, operates a mix of company-owned and franchised locations across the United States, Brazil, South Korea, and several other countries.

Financial Performance Overview

Bloomin Brands Inc (NASDAQ:BLMN) reported a mixed financial performance in the fourth quarter of 2023. Total revenues for Q4 2023 rose to $1,194.2 million, marking a 9.1% increase from the previous year, bolstered by an additional operating week, foreign currency translation effects, and the net impact of restaurant openings and closures. However, this was partially offset by the absence of Brazil's value-added tax exemptions that benefited Q4 2022.

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Despite the revenue growth, diluted earnings per share (EPS) decreased to $0.45 from $0.61 in the prior year's quarter, primarily due to the impacts of the 2023 Closure Initiative. Conversely, adjusted diluted EPS, which excludes certain non-recurring items, improved from $0.68 to $0.75, reflecting the company's operational adjustments and cost-saving initiatives.

Operational Highlights and Challenges

The slight improvement in restaurant-level operating margin to 16.4% was attributed to an increase in average check per person and the impact of cost-saving measures. However, these gains were partially offset by commodity and labor inflation, as well as higher advertising expenses. The company's GAAP operating income margin suffered a decline, falling from 7.7% to 4.8% year-over-year, largely due to the aforementioned closure initiative.

Comparable restaurant sales showed a mixed picture, with a slight overall decline of 0.2% in the U.S. Outback Steakhouse in Brazil, however, experienced a modest increase of 0.6%, excluding the effects of currency fluctuations and tax exemptions.

"The fourth quarter was a good finish to 2023, especially the holiday season," said David Deno, CEO of Bloomin Brands Inc (NASDAQ:BLMN). "As we head into 2024, we remain focused on elevating the guest experience that in turn will drive sales and profit growth at Outback Steakhouse and all of our brands."

Strategic Decisions and Future Outlook

Bloomin Brands Inc (NASDAQ:BLMN) declared a quarterly cash dividend of $0.24 per share and announced a new $350 million share repurchase program. This move reflects the company's confidence in its financial stability and commitment to delivering shareholder value.

The 2023 Closure Initiative, which involves the shuttering of 36 underperforming restaurants, is expected to incur additional charges in Q1 2024. Despite these closures, the company plans to open 40 to 45 new system-wide restaurants in 2024, indicating a strategic shift towards more profitable locations.

For fiscal 2024, Bloomin Brands Inc (NASDAQ:BLMN) anticipates U.S. comparable restaurant sales to be flat to up 2%, with adjusted diluted EPS ranging from $2.51 to $2.66. The company also forecasts commodity inflation of 3% to 4% and capital expenditures between $270 million to $290 million.

The financial outlook for Q1 2024 includes the impact of the 53rd week in the previous fiscal year, adverse weather effects, and the lapping of the Brazil tax legislation benefit. These factors are expected to influence both U.S. comparable sales and adjusted earnings per share.

Overall, Bloomin Brands Inc (NASDAQ:BLMN)'s earnings report presents a company navigating through strategic closures and cost pressures while still managing to deliver growth in adjusted earnings. The company's focus on operational efficiency and guest experience, coupled with its share repurchase program, positions it for potential growth in the coming year.

Explore the complete 8-K earnings release (here) from Bloomin Brands Inc for further details.

This article first appeared on GuruFocus.