Bloomin' Brands Plans to Close 14 Bonefish Locations | Food Newsfeed
Continue to Site

Bloomin' Brands Plans to Close 14 Bonefish Locations

February 17, 2016 Industry News
Industry News

Bloomin' Brands, Inc. reported results for the fourth quarter and fiscal year ended December 27, 2015 compared to the fourth quarter and fiscal year ended December 28, 201.

Key highlights for Q4 2015 include the following:

  • Adjusted restaurant margin was 16.5 percent versus 15.7 percent in Q4 2014 and U.S. GAAP restaurant margin was 16.1 percent versus 16.3 percent in Q4 2014,
  • Added 11 new restaurants, including eight in international markets.
  • Comparable sales for Outback Steakhouse in Brazil increased 7.3 percent.

Key highlights for Fiscal Year 2015 include the following:

  • Adjusted restaurant margin was 16.5 percent versus 15.9 percent in Fiscal Year 2014 and U.S. GAAP restaurant margin was 16.5 percent versus 16.1 percent in Fiscal Year 2014.
  • Added 49 new restaurants, including 29 in international markets.

The company repurchased approximately 7.6 million shares of common stock for a total of $170 million.

Subsequent to Q4 2015:

  • Extinguished the 2012 CMBS Loan using proceeds from a new $300 million bridge loan and borrowings from the percent revolving credit facility. Interest savings of approximately $12 million in 2016 are anticipated.
  • The company's board of directors authorized a new $250 million share repurchase program.

"Our fourth quarter earnings were in line with expectations and we achieved our earnings objectives for the year," says Liz Smith, CEO. "2015 was highlighted by the strength of our International business and ongoing productivity efforts, which led to 60 basis points of adjusted restaurant margin expansion. We delivered this result in the face of elevated commodities, wage inflation and foreign currency headwinds."

Smith continues, "As we enter 2016, the underlying health of our portfolio remains strong. We are making the necessary investments to enhance our domestic sales performance while executing against our broader portfolio strategies."

Fourth Quarter Financial Results

The decrease in total revenues was primarily due to the effect of foreign currency translation, lower comparable restaurant sales and lower revenue due to the sale of Roy's, partially offset by the net benefit of new restaurant openings and closings.

The increases in adjusted restaurant-level operating margin and adjusted operating income margin were primarily due to productivity savings, lower advertising expense and menu pricing. These increases were partially offset by commodity and wage inflation.

The difference between adjusted and U.S. GAAP restaurant-level operating margins was due to legal settlement expenses in Q4 2015 and a legal settlement gain in Q4 2014. 

The decrease in U.S. GAAP operating income margin in Q4 2015 was due to lower U.S. GAAP restaurant-level operating margin as described above and costs related to the Bonefish Restructuring, partially offset by the lapping of costs related to the International Restaurant Closure Initiative and impairment costs related to the sale of Roy's.

U.S. Segment Operating Results

The decrease in total revenues was primarily due to lower comparable restaurant sales and lower revenue due to the sale of Roy's, partially offset by the net benefit of new restaurant openings and closings.

The increases in adjusted restaurant-level operating margin, U.S. GAAP restaurant-level operating margin, and adjusted operating income margin were primarily due to productivity savings, lower advertising expense and menu pricing. These increases were partially offset by commodity and wage inflation.

The decrease in U.S. GAAP operating income margin in Q4 2015 was primarily due to costs related to the Bonefish Restructuring. These decreases were partially offset by the lapping of impairment costs related to Roy's.

International Segment Operating Results

The decrease in total revenues is primarily due to foreign currency translation and the impact of the International Restaurant Closure Initiative, partially offset by new restaurant openings and higher comparable restaurant sales.

The increase in adjusted restaurant-level operating margin was primarily due to higher average unit volumes, menu pricing and productivity savings, partially offset by higher commodity and wage inflation and product mix.

The decrease in adjusted operating income margin was primarily due to higher depreciation and amortization and higher investment spending for Abbraccio and China in Q4 2015.

The increase in U.S. GAAP operating income margin was driven by the lapping of expenses related to the International Restaurant Closure Initiative.

Foreign currency translation negatively impacted adjusted operating income by $4.0 million.

Unallocated Corporate Operating Expense

Certain expenses are managed centrally and are not allocated to the U.S. or International segment. In Q4 2015, unallocated expenses at the restaurant operating level were $6.7 million lower than Q4 2014 primarily due to lower incentive compensation expense.

System-wide Development

The following summarizes the company's system-wide development for the 13 weeks ended December 27, 2015:

Dividend Declaration and Share Repurchases

The company's board of directors declared a quarterly cash dividend of $0.07 per share to be paid on March 10 to all stockholders of record as of the close of business on February 29.

During Q4 2015, the company repurchased $10 million of outstanding stock under the share repurchase program, which left $30 million remaining under their 2015 authorization. On February 12, the company's board of directors canceled the remaining 2015 authorization and approved a new $250 million authorization. The authorization will expire on August 12, 2017.

Bonefish Restructuring

The company is announcing its intention to close 14 locations as part of the Bonefish Restructuring. They expect the majority of these restaurants to close in 2016. In connection with these closures, the company incurred pre-tax asset impairments of approximately $24.2 million during the thirteen weeks ended December 27, 2015. These charges are excluded from the adjusted results.

CMBS Refinancing

On February 11, the company closed a $300 million bridge loan. They used the proceeds from the bridge loan and cash drawdowns from the revolving credit facility to facilitate an extinguishment of the 2012 CMBS Loan. In connection with the extinguishment, the company anticipates recognizing a loss of $26 million to $29 million during the first quarter of 2016. These charges will be excluded from the adjusted results.

The company expects to generate annual interest savings of approximately $12 million from this transaction.

News and information presented in this release has not been corroborated by FSR, Food News Media, or Journalistic, Inc.