Brinker International, the parent company of the well-known Chili's Grill & Bar chain, recently provided an earnings outlook for fiscal year 2025 that fell short of Wall Street's expectations, particularly at the midpoint. The announcement of their fourth-quarter financial results caused the stock of this notable casual dining restaurant group to experience a significant drop.
For the upcoming fiscal year, Brinker anticipates adjusted earnings per share (EPS) in the range of $4.35 to $4.75, alongside projected revenues of approximately $4.55 billion to $4.62 billion. Analysts surveyed by Capital IQ had been expecting a normalized EPS of $4.70 and revenue totaling about $4.56 billion, making the company's forecast seem less optimistic in comparison. In the latest quarter, adjusted EPS increased to $1.61, a rise from $1.39 in the same quarter of the previous year.
However, this figure was still below analysts' expectations, which had pegged the figure at $1.72. Revenue for Brinker grew to $1.21 billion, exceeding the $1.08 billion of the prior year, yet falling short of the analysts' estimates which had predicted $1.16 billion. As a result of this disappointing news, Brinker shares saw a decline of 11% during Wednesday's afternoon trading session.
Despite these challenges, the company's fourth-quarter comparable restaurant sales reported a remarkable increase of nearly 14%, significantly outpacing the Street's expectations of just 8.6% growth. Notably, Chili's comparable sales surged almost 15%, primarily driven by increased menu pricing and higher customer traffic.
While Chili's traffic did experience a 5.9% growth, it was partially impacted by Brinker’s strategic decision to scale back on virtual brands, which contributed a roughly 2.3% decline. In addition, Maggiano's Little Italy saw its comparable sales climb by 2.5%. Kevin Hochman, the Chief Executive Officer, commented on the positive sales trajectory, stating, "We achieved another quarter of solid progress against our strategy to deliver profitable, sustainable growth.
We significantly outperformed the industry in both sales and traffic during the quarter, while maintaining record high guest metrics." Brinker also indicated that its ongoing investments in the business have led to enhanced restaurant staffing as well as increased repairs and maintenance expenses for the period. For fiscal year 2024, adjusted EPS rose notably to $4.10 from $2.83 in the previous year, albeit still trailing behind the $4.22 that analysts had anticipated.
Revenue increased to $4.42 billion from $4.13 billion, surpassing the consensus view that had estimated about $4.37 billion. The company's comparable restaurant sales grew 7%, reinforcing its commitment to continuing growth despite economic pressures. Overall, Brinker International is navigating a complex landscape in the casual dining sector, balancing growth initiatives and operational adjustments in the context of fluctuating consumer preferences and market dynamics..