Week's Winners, Losers: Olive Garden Beats, Sony Retreats
There were plenty of winners and losers this week, with the world's largest Italian casual-dining chain posting positive store-level sales growth for the first time in more than a year and a movie studio shelving a controversial film. Here's a rundown of the week's smartest moves and biggest blunders.
Sony (SNE) -- Loser
It's been a brutal month for Sony's entertainment division as hackers upset about the controversial "The Interview" flick have been leaking embarrassing emails from the movie studio's executives. Things took a turn for the worse when the hackers began threatening violence, prompting several leading movie chains to announce that they would not be screening the film.
This week Sony decided to pull the movie. It was a no-win scenario, but an already hairy situation for Sony is now worse because it suffered through the career-damaging emails without a product at the end to show for it. However, one has to wonder why Sony -- a Japanese company -- would take a chance in the first place by rolling out a movie in which the leader of North Korea is graphically assassinated. Hackers may have forced the issue, but it was a risky bet from the beginning.
Olive Garden -- Winner
We may finally be seeing the light at the end of the endless salad bowl. Darden Restaurants (DRI) posted better-than-expected quarterly results on Tuesday, but the real meaty morsel is that its flagship Olive Garden concept posted its first quarter of positive comparable-store sales in more than a year.
That put the ram in the tiramisu, but it's not all ladyfingers and mascarpone. After all, traffic at Olive Garden clocked in lower than the comparable period for two of the three months. The chain's 0.5 percent uptick in comps also failed to keep up with inflation. However, given all of the shortcomings at Olive Garden -- problems so glaring that activists convinced shareholders two months ago to vote out Darden's entire board of directors -- it's a step in the right direction.
Auto Recalls -- Loser
We may as well call this the year that automobiles shifted into reverse. Sales are still strong, but there have been a lot of recalls sending drivers back to their dealers. This week's big callback was from Ford (F), which expanded its recall of defective airbags to more than 500,000 vehicles.
Car manufacturers have recalled roughly 60 million U.S. vehicles this year. That's nearly double the previous annual record of 30.8 million set a decade ago.
The news out of Ford this week wasn't all bad, though. It finally started deliveries of its 2015 F-150 trucks. Not having the updated trucks was a big reason that Ford lagged its rivals in November sales. However, as long as recalls keep expanding, it's hard to tab Ford or any of its peers a winner this week.
Rite Aid (RAD) -- Winner
Whatever Rite Aid is prescribing for itself, it's working. The chain of 4,572 drugstores posted another quarter of blowout results this week, sending the stock sharply higher on Thursday. Rite Aid's revenue moved modestly higher to $6.7 billion, but the real head-turning line on the income statement is the adjusted profit of $0.10 a share. Analysts were only holding out for half as much.
This is the second quarter in a row that Rite Aid has earned at least twice as much as analysts were targeting. The company also boosted its outlook.
Dunkin' Brands (DNKN) -- Loser
Sometimes it's hard to believe a company's spin. Dunkin' Donuts parent Dunkin' Brands issued a news release on Wednesday morning, bragging about selling 4.6 million of its Croissant Donut confections, making it one of the doughnut chain's most popular limited-time rollouts. Things are going so well that it's extending the offering through 2015. Since these treats cost roughly twice as much as a regular doughnut, one would think that it's going to be a banner year, but that's not the case.
Shares of Dunkin' Brands took a hit on Thursday after it initiated its outlook for the year ahead: It was short of what Wall Street was forecasting. I guess the Croissant Donut isn't the holy grail, after all.
Speaking of the hybrid croissant and doughnut, let's take Dunkin' Brand's bragging to task.
"The positive customer response to our Croissant Donut reflects the success of our strategies focused on providing guests a menu that offers a combination of old favorites like our Original Blend Coffee and innovative and fun new products like the Croissant Donut," John Costello -- president of Global Marketing and Innovation for Dunkin' Brands -- is quoted as saying in the release.
Innovation? Really? The reason Dunkin' Brands has to call this thing the "Croissant Donut" is because the New York bakery that actually invented this treat a year earlier trademarked the Cronut name. For shame, Dunkin'. For shame.
Motley Fool contributor Rick Munarriz owns shares of Ford. The Motley Fool recommends and owns shares of Ford. Try any of our Foolish newsletter services free for 30 days. Want to make 2015 a winning investment year? Check out The Motley Fool's one great stock to buy for 2015 and beyond.