Latest news with #salesdecline
Yahoo
2 days ago
- Business
- Yahoo
Down 33%, Is Chipotle a Buy Now?
Key Points Chipotle posted its second straight quarter of comparable sales decline. Management announced several initiatives to help drive long-term growth. The company aims to double its restaurant count to 7,000. 10 stocks we like better than Chipotle Mexican Grill › Chipotle Mexican Grill (NYSE: CMG) has been one of the best-performing restaurant stocks of all time. Since its 2006 IPO, the burrito roller is up more than 5,000%. However, the company is now facing what appears to be its biggest challenge since at least COVID, and possibly going back to its E. coli crisis. Following the departure of star CEO Brian Niccol, who took the top job at Starbucks nearly a year ago, Chipotle has now reported two straight quarters of declining comparable sales. Though weakening consumer sentiment and discretionary spending are at least partly to blame for its struggles, the setbacks are bad enough that new CEO Scott Boatwright announced a multi-step plan to get the company back to growth after the stock fell 13% on Thursday, meaning it's now down 33% from its peak from late last year. The sell-off is understandable following the second-quarter results. Comparable sales fell 4% on a 4.9% decline in transactions, showing that customers simply aren't visiting as often. Revenue still rose 3% to $3.1 billion due to the effect of new store openings. Operating margin was down from 19.7% to 18.2%, while adjusted earnings per share fell from $0.34 to $0.33. Management also lowered its comparable sales guidance to flat. Chipotle's plan to bounce back On the earnings call, Boatwright described some of the changes he's making at the fast-casual chain and hinted at others. For example, Chipotle is rolling out a high-efficiency equipment package that includes new planchas, rice cookers, and fryers. Additionally, the company has added produce slicers to all restaurants to help improve prep times. Among other things, Boatwright is hopeful that this will drive greater demand for Chipotle's catering, driving it from 1% to 2% of sales to 5% to 10% of sales. It also sees opportunities to improve throughput. To counter a slowdown in summer visits, the company is ramping up its marketing, and it has returned to positive comps as of June. The company launched Summer of Extras, a gamified experience allowing rewards members to earn extra points and prizes. Boatwright also hinted at doing more to emphasize Chipotle's value proposition. It's unclear if that means offering something like a value menu or lower-cost items, or if Chipotle would emphasize its value in its marketing more. The new CEO seems to be following in the footsteps of Niccol, who also adopted some of the classic strategies of traditional fast food. This includes the drive-thru, which Chipotle has modified to its Chipotlane, which requires customers to order digitally. Chipotle also introduced a one-hour buy-one, get-one (BOGO) free, which was available during the normally slow hour of 3 p.m. to 4 p.m. Is Chipotle a buy? Chipotle's price-to-earnings (P/E) valuation fell to a recent low on the sell-off at 40, but that's still expensive by conventional standards and compared to the S&P 500's P/E ratio of 27.4. The recent decline in comparable sales may not be a reason to be alarmed, either. After all, the company has already returned to positive comps growth as of June and in July through the date of the report. We also know that restaurants have seen slowing growth this year due to weakening consumer sentiment, as spending on restaurants is one of the easiest areas for people to pull back on. The fast-casual chain also continues to plan for having 7,000 restaurants over the long term, about double what it has today. Despite the recent weakness, there's no reason to think that there's any fundamental change in Chipotle's business model or its customer perception. While the stock could be volatile over the coming months as the trade situation is still in flux, Chipotle still looks like a solid buy over the long term. Should you invest $1,000 in Chipotle Mexican Grill right now? Before you buy stock in Chipotle Mexican Grill, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the for investors to buy now… and Chipotle Mexican Grill wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $636,628!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $1,063,471!* Now, it's worth noting Stock Advisor's total average return is 1,041% — a market-crushing outperformance compared to 183% for the S&P 500. Don't miss out on the latest top 10 list, available when you join Stock Advisor. See the 10 stocks » *Stock Advisor returns as of July 28, 2025 Jeremy Bowman has positions in Chipotle Mexican Grill and Starbucks. The Motley Fool has positions in and recommends Chipotle Mexican Grill and Starbucks. The Motley Fool recommends the following options: short September 2025 $60 calls on Chipotle Mexican Grill. The Motley Fool has a disclosure policy. Down 33%, Is Chipotle a Buy Now? was originally published by The Motley Fool Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
5 days ago
- Business
- Yahoo
Chipotle CEO says there's ‘no smoking gun' for burrito sales dip—but he wants customers to give the chain more ‘credit' for affordable prices
CEO Scott Boatwright said the burrito chain needs to work on selling itself as a bargain brand for jittery, budget-strapped consumers. The company reported on Wednesday a 4% same-store quarterly sales decline and cut its guidance for the rest of the year, citing poor consumer sentiment and economic uncertainty. As more Americans grow anxious about the economy and start pulling back on eating out, CEO Scott Boatwright wants consumers to give Chipotle some more credit for its low prices. The Newport Beach, California-based burrito-bowl chain reported sagging earnings Wednesday, including a 4% same-store sales decline and 4.9% dip in quarterly traffic. While Chipotle saw a 3% total revenue increase to $3.1 billion, the company cut its guidance, now expecting flat same-store sales growth for the year compared to its previous prediction of a low single-digit increase. Chipotle CEO Scott Boatwright attributed the rough quarter—Chipotle's second consecutive sales decline—in part to rocky economic conditions leading consumers to pull back. Chipotle's same-store sales improved in June, and that's likely to be the case for July as well, according to the company, but lackluster sales in April and May correlated with 'consumer sentiment bottoming around that time.' Boatwright added consumers have seemingly forgotten that Chipotle, compared to its fast-casual rivals, is a bargain. 'I don't think we're getting credit with the consumer today,' Boatwright told investors on Wednesday. 'So what I talked to the team about internally is, How do we better communicate our value proposition and center around the core equities of the brand?' 'I think we've got to figure out a way we can communicate value for the consumer and showcase the value we are to [quick-service restaurants] and fast-casual,' he added. Boatwright claimed in the earnings presentation Chipotle is 20% to 30% cheaper than comparable fast-casual restaurants. He told Fortune in April the chain wouldn't increase prices due to tariffs because 'it's unfair to the consumer to pass those costs off…because pricing is permanent.' Changing perceptions of value The CEO was firm in attributing Chipotle's sales slump to external macroeconomic factors, telling investors, 'There's no smoking gun here that says we've had a misstep.' However, he said low-income consumers in particular are looking for value when choosing where to dine. 'Look no further than what's going on with our competitors with snack occasions or five-dollar meals, and that's where the consumer is drifting towards…because of low consumer sentiment.' Indeed, fast-food giants like McDonald's are continuing to offer meal deals amid softening sales, particularly as these restaurants have seen more traffic from high-income consumers while those on a budget pull away. As Chipotle similarly tries to compete in an environment of cautious consumers, it will need to focus on its public perception and sell itself as an affordable option, according to Raymond James restaurant analyst Brian Vaccaro. 'Over the last two years, the industry has gotten more aggressive on value promotions and messaging,' Vaccaro told Fortune. 'There are certain brands that have a strong value proposition in the mind of the average consumer. But they didn't effectively message that, and it caused them to lose some mind share.' Olive Garden suffered this fate in 2024, Vaccaro said, when the fast-casual Italian chain's parent company Darden Restaurants reported a pull back from customers making less than $75,000. 'That could be something that's happened to Chipotle, where their value almost gets taken for granted a little bit,' Vaccaro said. In March, Olive Garden announced the return of its 'buy one, take one' promotion—essentially a buy one, get one free deal—for the first time in five years. The restaurant group attributed a modest earnings beat in June in part to the return of the offer. 'Everyone knows Olive Garden is a good value,' Vaccaro said. 'But if you're not reminding the guests of that, they could get distracted and wooed away by all of these value promotions that are floating around.' This story was originally featured on Sign in to access your portfolio
CTV News
5 days ago
- Business
- CTV News
Puma shares dive after warning of full-year loss, U.S. tariff impact
Puma shares dropped 16 per cent on Friday after the German sportswear brand said it now expects an annual loss as sales decline and U.S. tariffs dent profit. Puma has been struggling to attract shoppers as re-released retro sneakers, such as the Speedcat, have not sold as well as hoped, and CEO Arthur Hoeld, in the role since July 1, said the company needs to 'course-correct.' 'This year, 2025, will be a reset for Puma and 2026 will be a transition year for us,' said Hoeld, formerly sales chief at Adidas, who was appointed by Puma's board in April to turn performance around. 'We as a company need to take a hard look at ourselves,' he said on a conference call with journalists. 'We do have tremendous potential with a brand that hasn't been unlocked yet, but a brand that also requires a reset and a new way forward.' Hoeld said he planned to review Puma's growth plan and strengthen the quality of wholesale distribution, and that he would give a broader roadmap on his strategy for Puma by the end of October. 'Puma is facing an existential identity crisis in terms of relevance in a sporting goods industry that is more competitive, and at a time when the largest player Nike is staging its comeback from Autumn/Winter '25,' said RBC analyst Piral Dadhania. Tariff hit U.S. tariffs will reduce Puma's gross profit this year by about 80 million euros (US$94 million) despite efforts to offset the pain, including U.S. price hikes in the fourth quarter, Chief Financial Officer Markus Neubrand said. He declined to say how much prices would go up. Sportswear retailers like Nike, Adidas and Puma rely on Southeast Asian countries like Vietnam for the sneakers and clothes they import into the United States, making them especially exposed to tariffs. Puma frontloaded shipments of goods from Asia ahead of successive U.S. tariff deadlines, Neubrand said, driving inventory levels up and contributing to more discounting. Most Puma products sold in the United States are made in Vietnam, Cambodia, and Indonesia, Neubrand said, and the company aims to cut its sourcing from China to the U.S. further from 10 per cent currently. In preliminary earnings released late on Thursday, Puma said annual sales would decline by at least 10 per cent, having previously forecast low to mid-single-digit growth. Puma's second-quarter currency-adjusted sales of 1.94 billion euros were weaker than analysts expected, with North America sales dropping 9.1 per cent and Europe down 3.9 per cent. The company did not say how big the annual loss was likely to be. It previously forecast earnings before interest and tax of between 445 million euros and 525 million euros for the year. Puma also cut its capital expenditure plans for the year to 250 million euros from 300 million euros previously. (Reporting by Ozan Ergenay in Gdansk and Helen Reid in London; Editing by Matt Scuffham, Tomasz Janowski, Edwina Gibbs and Emelia Sithole-Matarise)
Yahoo
6 days ago
- Automotive
- Yahoo
Tesla shares drop almost 6% after results
LONDON/MILAN (Reuters) -Tesla shares fell nearly 6% in early trading in Europe on Thursday, after Elon Musk's electric vehicle maker posted its worst quarterly decline in sales in over a decade. Shares in the company were down 5.7% in Frankfurt, having dropped 5% in after-hours trading on Wall Street on Wednesday. Tesla's second-quarter profit missed analysts' expectations, yet its profit margin on making cars was not as bad as many had feared. On a conference call, chief executive Musk said U.S. government cuts in support for electric vehicle makers could lead to a "few rough quarters" for the company before a wave of revenue from self-driving software and services begins late next year.
Yahoo
6 days ago
- Automotive
- Yahoo
Tesla shares drop almost 6% after results
LONDON/MILAN (Reuters) -Tesla shares fell nearly 6% in early trading in Europe on Thursday, after Elon Musk's electric vehicle maker posted its worst quarterly decline in sales in over a decade. Shares in the company were down 5.7% in Frankfurt, having dropped 5% in after-hours trading on Wall Street on Wednesday. Tesla's second-quarter profit missed analysts' expectations, yet its profit margin on making cars was not as bad as many had feared. On a conference call, chief executive Musk said U.S. government cuts in support for electric vehicle makers could lead to a "few rough quarters" for the company before a wave of revenue from self-driving software and services begins late next year. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
