What Happened?
Shares of casual restaurant chain Portillo’s (NASDAQ: PTLO) fell 3.2% in the morning session after the company announced a major leadership change, with President and CEO Michael Osanloo departing effective immediately.
The board appointed its Chairman, Michael A. Miles, Jr., as the Interim CEO. In a statement, the company acknowledged that its "recent performance has not measured up to expectations." This shake-up followed mounting pressure from activist investor Engaged Capital. The company's struggles were clear, as it recently cut its full-year guidance for same-store sales, shifting from an expected 1% to 3% growth to a projected decline of 1% to 1.5%. With revenue growth slowing and the stock having fallen significantly over the previous year, the leadership change signaled deep-seated issues that concerned investors.
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What Is The Market Telling Us
Portillo’s shares are extremely volatile and have had 30 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 13 days ago when the stock dropped 6.4% on the news that 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.
Portillo's is down 31.8% since the beginning of the year, and at $6.32 per share, it is trading 58.9% 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 $217.32.
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