Bloomin’ Brands Earnings Call: Challenges and Optimism

Bloomin’ Brands ((BLMN)) has held its Q3 earnings call. Read on for the main highlights of the call.

Bloomin’ Brands Earnings Call: A Mixed Bag of Challenges and Optimism

The recent earnings call for Bloomin’ Brands painted a picture of both challenges and optimism. While the company is grappling with financial losses and higher operating costs, there is a positive momentum in sales and traffic gains. The introduction of a comprehensive turnaround strategy for Outback Steakhouse and improved brand trust and guest scores are promising signs. Despite the hurdles, the strategic initiatives and a strong balance sheet suggest a hopeful outlook for the future.

Positive Q3 Sales Momentum

Bloomin’ Brands reported a significant improvement in sales during the third quarter. The sales comp was up by 120 basis points, a notable increase from the previous quarter. U.S. traffic, although slightly negative, showed a marked improvement of 190 basis points compared to Q2. All brands under Bloomin’ achieved positive comp sales growth for the first time since the first quarter of 2023, signaling a positive trend.

Outback Turnaround Strategy

A major highlight of the earnings call was the introduction of a comprehensive turnaround strategy for Outback Steakhouse. The company plans to invest $75 million between 2026 and 2028, focusing on enhancing steak quality, service, people, guest experience, and marketing. This strategic initiative is aimed at revitalizing the brand and improving its market position.

Improved Brand Metrics

Outback Steakhouse has seen a significant improvement in its brand metrics. Brand trust has increased by 6 points year-over-year, and guest scores across various parameters such as food, service, value, and atmosphere have shown positive trends. These improvements reflect the company’s efforts to enhance customer satisfaction and loyalty.

Strong Cash Flow and Balance Sheet

Despite the financial challenges, Bloomin’ Brands boasts a strong cash flow and a healthy balance sheet. The company has ample liquidity to support its turnaround efforts. Additionally, the second installment of the Brazil refranchising transaction is expected to bring in approximately $122 million, further strengthening its financial position.

GAAP Diluted Loss Per Share

The financial performance of Bloomin’ Brands showed some setbacks, with a GAAP diluted loss per share of $0.54, compared to a loss of $0.01 per share last year. The adjusted diluted loss was $0.03 per share, a decline from earnings of $0.11 per share in the previous year. These figures highlight the financial challenges the company is facing.

Higher Operating Costs

The company experienced higher operating costs in the third quarter, with adjusted operating margins at 0.8%, down from 2.3% last year. This decline was attributed to COGS inflation of 4.9%, labor inflation of 3.3%, and increased operating and supply expenses, which have impacted profitability.

Underperforming Restaurant Closures

In an effort to streamline operations, Bloomin’ Brands closed 21 underperforming restaurants and identified 22 restaurants for lease non-renewal. This move is part of the company’s strategy to focus on more profitable locations and improve overall efficiency.

Forward-Looking Guidance

Looking ahead, Bloomin’ Brands has provided an updated guidance for the fiscal year 2025. The company raised its U.S. comp sales guidance to between flat and positive 50 basis points and adjusted diluted earnings per share to $1.10 to $1.15. For the fourth quarter of 2025, U.S. comparable restaurant sales are expected to be between positive 50 basis points and positive 150 basis points. The company is optimistic about its turnaround strategy, particularly for Outback Steakhouse, with plans for significant investment and productivity savings.

In conclusion, Bloomin’ Brands’ earnings call revealed a mix of challenges and optimism. While financial losses and higher operating costs pose hurdles, the positive sales momentum, strategic turnaround initiatives, and strong financial position provide a hopeful outlook. The company’s focus on improving brand metrics and customer experience is expected to drive future growth and profitability.