What Happened?
Shares of casual restaurant chain Portillo’s (NASDAQ: PTLO) fell 6.4% in the afternoon session after the company significantly lowered its 2025 outlook for new restaurant openings, same-store sales, and revenue growth.
The restaurant chain announced it now expects to open only eight new locations this year, down from a prior estimate of 12. More significantly, Portillo's revised its annual same-store sales forecast from an expected growth of 1% to 3% to an anticipated decline of 1% to 1.5%. Consequently, the revenue expansion target for 2025 was trimmed from 10-12% down to 5-7%. The company cited sluggish traffic, underperforming new stores, and industry-wide pricing dynamics for the guidance changes, which are part of a strategic reset to simplify operations. This news followed a recent second-quarter report that showed a slight miss on both earnings and revenue.
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What Is The Market Telling Us
Portillo’s shares are very volatile and have had 29 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was 2 days ago when the stock dropped 3.2% on the news that the stock continued to decline as the company reported second-quarter 2025 financial results that fell short of expectations and lowered its full-year guidance. The company posted revenue of $188.5 million, below the forecasted $196.5 million, and earnings per share of $0.12. Following the results, Portillo's reduced its 2025 revenue and EBITDA guidance, citing softer performance and weaker-than-expected sales from new store locations. In response to the weaker outlook, UBS adjusted its price target for Portillo's downward to $9.00 from a previous target of $12.00, though it maintained a Neutral rating on the stock. The news comes as the company also recently announced the appointment of Denise Lauer as its new Chief Marketing Officer.
Portillo's is down 34.6% since the beginning of the year, and at $6.06 per share, it is trading 60.6% below its 52-week high of $15.39 from February 2025. Investors who bought $1,000 worth of Portillo’s shares at the IPO in October 2021 would now be looking at an investment worth $208.25.
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