The stock has also seen a series of slumps recently and was down a net of nearly 15% since late June. Consequentially, some "relief buying" might also be in play here as the results were better than some investors had feared. Overall, revenue declined modestly by 0.4% to $1.03 bln, slightly missing the $1.05 bln consensus.
While the year/year drop isn't a positive, it is notable that the 0.4% decline is actually BLMN's second best performance over the past thirteen quarters. In fact, the only quarter it has posted positive growth during this span was in 4Q17, when revenue climbed by 8.3%. What kept BLMN from achieving positive year/year growth was a (6.1)% drop in comparable restaurant sales at its Brazilian Outback locations. Recently, the Brazilian currency (Brazilian real) has taken a drastic tumble as concerns about the economy there mount. Those concerns likely had a negative impact on the performance of those restaurants.
However, U.S. Outback restaurants continue to shine, up 4.0% this quarter, following a 4.3% increase last quarter, and a 4.7% jump in Q4. A mixture of both increases in traffic and a bump in average check size has been driving these healthy results.
Another modest positive factor for BLMN this quarter is that Adjusted restaurant-level operating margin edged higher by ten basis points to 14.9%. That's a particularly encouraging result considering the rising labor and commodity costs facing BLMN and other restaurant and food services companies.
So as a result of the strong comps at Outback and the bump in operating margins, BLMN's Adjusted EPS came in at $0.38, comfortably beating the $0.27 consensus. With the company exceeding analysts' EPS expectations by $0.13, the company has now posted solid back-to-back EPS beats.
Furthermore, BLMN also raised its FY18 U.S. comparable restaurant sales growth outlook to +1.5-2.5% from +1-2%, again, thanks to the continuing momentum at Outback. Its other brands - Carrabba's Italian Grill, Bonefish Grill, Fleming's Prime Steakhouse -- don't carry nearly as much weight as Outback, and those brands aren't seeing quite as strong of growth either. BLMN reported year/year domestic comp sales percentage changes of (0.6)% at its Carrabba’s chain, down from 0.4% last year; 1.5% at Bonefish Grill locations, up from (2.6%); and 0.3% for Fleming’s Prime Steakhouse resaurants, up from (1.3)%.
Overall, it was a good quarter for BLMN, driven by the impressive results from Outback. The slowdown in Brazil and a further rise in commodity and labor costs are two factors that could present a headwind for the company and the stock down the road. But given the low expectations gathered around the stock heading into this morning's print, the positive Q2 report should provide a near-term boost for shares.