Brinker International (EAT) released its earnings report for the second quarter of fiscal 2024. The company, known for its popular restaurant chains Chili's and Maggiano's, exceeded analysts' estimates for both EPS and system-wide comparable sales.
For the second quarter, Brinker reported adjusted EPS of 99 cents, compared to 76 cents in the same quarter last year. This represents a significant year-over-year growth and surpassed the estimated EPS of 94 cents. The strong earnings growth can be attributed to Brinker's effective marketing and pricing strategies, which have contributed to an increase in guest traffic.
However, while Brinker's system-wide comparable sales saw a growth of 4.4% during the quarter, it fell short of the 9.1% growth recorded in the same period last year and missed the estimated growth of 6.63%. The company-owned sales were up 5.2%, slightly lower than the 9.7% growth achieved in the previous year but higher than the estimated growth of 6.08%.
Chili's, one of Brinker's primary brands, reported a comparable restaurant sales growth of 5%, which, while positive, is lower than the 8% growth recorded in the previous year. Maggiano's , their upscale Italian restaurant chain, saw an impressive 6.7% growth in comparable restaurant sales, although this was lower than the substantial 21.2% growth achieved in the same quarter last year. The decline highlights the tougher comps faced by restaurants as the World continues to normalize following the pandemic.
With the increase in sales, Brinker experienced improvements in its operating income margin, which rose to 5.8%, and its restaurant operating margin, reaching 13.1% for the second quarter.
Brinker provided updates to its full year fiscal 2024 guidance. The company expects net income per diluted share, excluding special items, to be in the range of $3.45 - $3.70. Additionally, total revenues are projected to be in the range of $4.30 billion - $4.35 billion for the year, indicating confidence in sustained growth. The company also reiterated its previously stated guidance for weighted average shares, which are expected to be between 45 million and 46 million, and capital expenditures, anticipated to range from $175 million to $195 million.
Shares of EAT broke above $41 resistance following the news. It has closed out the downward trend that had been in place to start the year. The stock faces tough sledding if it wants to break above the 2023 high of $44.97. We would expect to see some sideways consolidation in the $40-45 area in coming weeks.
Overall, Brinker International's earnings report for the second quarter of fiscal 2024 showcases their solid financial performance and successful execution of effective marketing and pricing strategies. Although some of their comparable sales growth fell short of last year's figures, the company remains optimistic about future prospects, as reflected in their reaffirmation of full-year fiscal 2024 guidance. Brinker's ability to navigate challenges and drive growth positions them well within the competitive restaurant industry.