Portillos 2025 Q1 Earnings Mixed Results as Net Income Falls 25.3%

Portillo's (PTLO) reported its fiscal 2025 Q1 earnings on May 06th, 2025. The company posted mixed results for the quarter, with revenue rising 6.4% to $176.4 million, slightly below analyst expectations of $180.7 million. Adjusted EBITDA came in at $21.21 million, missing estimates by 6.9%. In terms of guidance, Portillo's revised its projections for same restaurant sales growth to 1% to 3% and expects total revenue growth between 10% and 12%. Overall, these adjustments reflect a cautious optimism amid challenging market conditions.

Revenue

The total revenue of Portillo's increased by 6.4% to $176.44 million in 2025 Q1, up from $165.83 million in 2024 Q1.

Earnings/Net Income

Portillo's EPS declined 37.5% to $0.05 in 2025 Q1 from $0.08 in 2024 Q1. Meanwhile, the company's net income declined to $3.99 million in 2025 Q1, down 25.3% from $5.34 million reported in 2024 Q1. The EPS performance was disappointing given analysts' expectations.

Price Action

The stock price of Portillo's has climbed 5.97% during the latest trading day, has edged up 0.58% during the most recent full trading week, and has dropped 7.67% month-to-date.

Post-Earnings Price Action Review

Over the past five years, buying Portillo's shares after a revenue drop quarter-over-quarter and holding for 30 days has resulted in significant underperformance compared to the benchmark. The strategy yielded a return of -26.71%, with a benchmark return of 17.04%, indicating an excess return of -43.75%. The strategy's compound annual growth rate was -8.53%, with a maximum drawdown reaching -48.69%, highlighting high risk and poor returns. Investors following this approach have consistently seen worse results, suggesting that revenue declines may signal deeper issues within the company's financial health. This pattern underscores the importance of thorough analysis before committing to such investment strategies, as historical data strongly indicates the potential for substantial losses.

CEO Commentary

Michael Osanloo, President and Chief Executive Officer of Portillo's, expressed gratitude for the team's dedication, emphasizing that despite challenges such as declining consumer confidence and adverse weather, the company achieved a 1.8% increase in same restaurant sales and total revenue of $176.4 million in Q1. He highlighted the slower start of new restaurants opened in Q4 2024, attributing it to brand awareness issues in newer markets, particularly Houston. Osanloo remains optimistic about ongoing initiatives, including an effective advertising campaign in Dallas-Fort Worth and the launch of the Portillo’s Perks loyalty program, which aims to enhance guest engagement and sales.

Guidance

Portillo's expects same restaurant sales growth to be in the range of 1% to 3%, adjusted from a previous range of flat to up 2%. Total revenue growth is now anticipated to be between 10% and 12%, revised from 11% to 12%. The company projects adjusted EBITDA growth of 5% to 8%, down from 6% to 8%, and plans to open 12 new restaurants in 2025. General and administrative expenses are estimated to be between $80 million and $82 million, reduced from a prior range of $82 million to $84 million.

Additional News

Portillo's has announced a cooperation agreement with Engaged Capital to strengthen its Board of Directors. The partnership aims to identify and appoint a new director with recent restaurant operations experience. This follows the earlier appointment of Jack Hartung to the Board in January, facilitated by Engaged Capital. Additionally, Portillo's launched 'Portillo's Perks', an app-less loyalty program integrating directly with customers' digital wallets, offering personalized rewards based on visit frequency. The program targets 1.5-1.7 million membership signups by midsummer 2025. Lastly, Portillo's is celebrating Italian Beef Day throughout May, featuring a buy-one-get-one-free sandwich offer for loyalty members and a specially wrapped CTA train running from May 5 to June 1.