TAMPA — Bloomin' Brands expected business would rebound after harsh winter weather kept diners away throughout much of the country.
But it hasn't. Instead, traffic at its U.S. restaurants was flat, based on its second-quarter earnings report released Tuesday. Domestic sales were up just 0.6 percent.
"We're not satisfied with our results this quarter," CEO Liz Smith said in a conference call with analysts.
The news pummeled Bloomin' Brands' stock on a rough day in the markets. Company shares lost nearly a quarter of their value Tuesday, closing at $15.06.
The quarterly results prompted the Tampa-based parent of multiple restaurant chains to downgrade its 2014 outlook. Annually, earnings per share are now expected to be between $1.05 to $1.10 (down from $1.21), while domestic sales are expected to be flat to up 1 percent (down from 1 to 2 percent).
Much of the adjustment was due to Bloomin's struggles in Korea, where the chain has more than 100 Outback Steakhouses. An influx of competitors and reduced discretionary spending among residents have created challenges expected to continue throughout the year, Smith said.
The opposite is true in Brazil, where the Outback chain is doing well and has added three steak houses this year. Next year, the company plans to open the first of its Carrabba's Italian Grill chain in Brazil, based on the success there of its Outback brand.
Another Bloomin' brand, Fleming's Prime Steakhouse and Wine Bar chain, performed the best, with sales up 3.6 percent for the quarter. Outback sales were up 0.9 percent and sales of its Bonefish Grill chain were up 0.3 percent. Sales at Carrabba's, which recently launched a new menu, were down 1.2 percent.
Bloomin's net income for the quarter was $26.4 million, a steep decline from the $74.9 million for the same quarter last year. Earnings per share were 21 cents, down 37 cents.
Smith said that since Carrabba's new menu hasn't produced the anticipated bump in traffic, it will be tweaked to emphasize lighter, more affordable items to boost weekday business. About a week ago, Bonefish debuted its own new menu, its first since 2008, with about 35 new food and beverage items.
Overall, revenue in the quarter increased 9 percent to $1.1 billion, largely due to Bloomin' acquiring a controlling interest in its Outback operations in Brazil and opening new restaurants.
Adding lunch at many of the restaurants has increased traffic but has been offset by declines in dinner business, which has a higher ticket price.
Contact Susan Thurston at [email protected] or (813) 225-3110. Follow @susan_thurston.