Why Bloomin' Brands (BLMN) Shares Are Plunging Today

What Happened?

Shares of restaurant company Bloomin’ Brands (NASDAQ:BLMN) fell 27.6% in the afternoon session after the company reported declining profit margins and slashed its full-year earnings forecast, citing rising costs. While second-quarter revenue held steady at $1 billion, profitability eroded due to higher expenses for labor, commodities, and operations. The company's restaurant-level operating margin tightened to 12.0% from 14.0% a year earlier, a key metric that investors watched closely. The outlook particularly worried investors. Bloomin' Brands lowered its full-year earnings per share guidance to a range of $1.00 to $1.10, down from a prior outlook of $1.20 to $1.40. Furthermore, the company projected a loss for the upcoming third quarter, a sharp contrast to analyst expectations for a profit.

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What Is The Market Telling Us

Bloomin' Brands’s shares are extremely volatile and have had 45 moves greater than 5% over the last year. But moves this big are rare even for Bloomin' Brands and indicate this news significantly impacted the market’s perception of the business.

The previous big move we wrote about was 2 days ago when the stock gained 3.3% on the news that the company announced significant leadership changes designed to simplify its business and focus on a turnaround for its Outback Steakhouse brand. The company appointed a new Chief Financial Officer, Eric Christel, as part of a strategy to enhance operational focus and drive sustainable growth. The news, officially released on August 4th, followed a weekend during which the stock had already gained ground. Investor optimism seemingly overlooked a separate analysis that had flagged the stock as overvalued, focusing instead on the potential for the company's recovery plans.

Bloomin' Brands is down 46% since the beginning of the year, and at $6.45 per share, it is trading 64.5% below its 52-week high of $18.18 from August 2024. Investors who bought $1,000 worth of Bloomin' Brands’s shares 5 years ago would now be looking at an investment worth $557.91.

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