This Is The Comeback Story Of Q1
Dear Rundown Reader,
In an earnings season filled with down days, it’s important to remember there are still plenty of positives to latch onto.
You may have picked up on that theme over the past few issues.
Wednesday we looked at Coca-Cola, who proved having liquid operations to match changing consumer tastes is a perfect formula for success.
Thursday we looked at Boeing, who showed doubling down on already strong operations is another way to top earnings and keep shares on the upswing.
Today we’ll look at Chipotle, who might be the comeback story of the quarter. Perhaps the year.
Here’s how they did it.
Your Rundown for Friday, April 27, 2018…
All Hail Brian Niccol
Success comes from strong leadership.
Case in point, Chipotle (NYSE: CMG).
CMG is on a tear it hasn’t seen in years.
Since 2006, according to Bloomberg.
Much of CMG’s success is attributable to its new CEO Brian Niccol.
Niccol arrived from Taco Bell in March and his fresh approach to operations is doing wonders for CMG.
The company crushed Q1 earnings , beating the Street’s estimates with a stellar report this Wednesday.
According to Barron’s, America’s favorite burrito maker earned $2.13 a share, crushing the $1.56 consensus, and hit $1.15 billion in revenue matching the Street’s estimates.
Shares shot as high as $425.65 Thursday before closing the day at $422.50.
This up from $333.22 at Wednesday’s open, marking an incredible 26% gain. CMG’s second best trading day ever, as reported by CNBC.
This all after CMG endured an epic sales slump following E. coli and norovirus outbreaks. “Along with a number of other issues including a hacker attack,” as reported by Bloomberg.
How did CMG turn things around?
As Niccol put it to The Wall Street Journal, a renewed “focus on improving the fast service and relatively simple menu that made the chain so popular to begin with” is the driving force behind CMG’s resurgence.
It’s not easy for a CEO to say “no” to large stakeholders.
But that’s exactly what Niccol did when Bill Ackman, CEO of Pershing Square Capital and 10% stakeholder of CMG, publicly called for the addition of breakfast to CMG’s menu.
“I’ve been very clear with him: Not now,” Niccol states in an Wall Street Journal interview. “Bill and I have had a couple of really good conversations. He may have some ideas that I don’t think are the right ones now.”
Niccol’s focus for the future is on increasing CMG’s “visibility,” as reported by Bloomberg.
This doesn’t mean revamping the menu. It means adding services like drive-thrus, in-store store kiosks, and extended hours.
As Niccol notes to the Journal: “Many customers want to eat its burritos before 10:30 a.m. and after 10 p.m.”
Niccol’s decisions are proof that a return to the core ideals that made CMG successful, and a willingness to say “no”, can amount to an amazing comeback story.
Now, turning to the markets this morning…
Market Rundown for Fri., April 27
S&P 500 futures are down 3.00 at 2,671.
Oil’s flat at $68.10.
Gold’s up $2.80 to $1,320.
Bitcoin goes for $9,311, according to CoinDesk this morning.
We’ll talk again on Monday.
For the Rundown,