Consumer Spec - Pre Market Wrap
MCD (+), TPR (+), CELH (+), BROS (-), SHAK (-), WHR (-), COST | FRPT Upgrade, QSR PTs Up, LULU PT Cut, KHC Consumer Stress, IHG China Strength, McValue 2.0, WHR Dividend Suspended, Tariff Math
U.S. equity futures are barely budging this Thursday — S&P +6bp, Nasdaq +2bp, R2K -4bp — as the Iran ceasefire optimism that propelled Wednesday’s rally runs into a wall of stretched valuations. Brent is sliding to ~$99, and Treasuries are bid with the 10-year drifting another 1-2bp lower. Yet the consumer cracks are loud — Whirlpool slashed guidance and suspended its dividend, citing recession-level demand, while Kraft’s CEO warned shoppers are "literally running out of money." Tehran’s response to Washington’s 14-point MOU is the swing factor today.
Consumer Pre-Market: Mixed Bag with Standouts Stealing the Show
Consumer pre-market is a tale of two tapes — restaurants and brands flexing while appliances buckle. MCD +2.5% prints solid SSSG with US comps +3.9% and check growth holding even as lower-income cohorts wobble. TPR +4% raises FY guide on Coach momentum, while CELH +3% crushes Q1 on Alani Nu synergies and international snapping back hard. BROS -5% is pure profit-taking — the print itself was beat-and-raise across every metric, Texas comps at +20% rebut the bear thesis. WHR -20% is the carnage story: dividend suspended, guide gutted, tariff math the only bull leg left. SHAK -20% blames weather, but a $8M EBITDA miss stings. KHC’s CEO flagging consumers “running out of money” is the macro tell nobody wanted to hear.
STREET RESEARCH
Upgrades
Freshpet (FRPT) Raised to Overweight at JPMorgan
Downgrades
Portillo’s (PTLO) Cut to Neutral at Guggenheim
Initiations
No consumer sector initiations
Earnings
MCD +3.5% : SOLID SSSG ACROSS THE BOARD DESPITE QUARTERLY NOISE, OUTLOOK IN FOCUS AMID LOWER-INCOME PRESSURES
Looks a decent print. Q1 adjusted EPS of $2.83 topped the $2.75 consensus on revenue of $6.52 billion versus $6.48 billion, up 9% YoY.
Global comparable sales rose 3.8%, with the U.S. up 3.9% on positive check growth, International Operated Markets up 3.9% led by U.K., Germany, and Australia, and IDL Markets up 3.4% led by Japan.
Systemwide sales grew 11% (6% constant currency) to over $34 billion. Operating income rose 12% (6% constant currency); ex-$47 million in restructuring charges tied to the Accelerating the Organization initiative, op income was up 11%. Loyalty Systemwide sales topped $9 billion across 70 markets.
Key items to this morning's conference call (8:30am EST): (1) the current read on consumer behavior amid macro/geopolitical uncertainties (esp. by income cohort), (2) key considerations in McValue 2.0, (3) any higher-income consumer trade-down and retention, (4) loyalty and digital sales contribution to average check, and (5) outlook for FY26 franchisee profitability.
TPR +4%: BROAD-BASED BEAT LED BY COACH; FY GUIDANCE RAISED
Looks solid in one of the best names in the sector. Stock has been an outperformer +100% y/y on consistent Coach demand.
Q3 EPS of $1.66 crushed the $1.28 consensus on revenue of $1.92 billion versus $1.76 billion expected — up 19% in constant currency.
Margins significantly outperformed, with op margin at 22.4% vs cons 18.6%, reflecting strong leverage and cost control.
Management raised FY26 EPS guidance to ~$6.95 from $6.40-$6.45 (consensus $6.51), implying >35% YoY growth, and lifted revenue guidance to $7.95 billion from >$7.75 billion (consensus $7.83 billion). FY26 op margin now seen at ~23%, ~300 bps of expansion vs prior ~180 bps. Adjusted FCF outlook lifted to ~$1.6 billion. Buyback raised to ~$1.3 billion in fiscal 2026 from $1.2 billion. Shares +4% premarket.
CELH +4%: STRONG Q1 SALES AND EPS BEAT POWERED BY ALANI NU MOMENTUM
CELH delivered a very strong Q1, with revenue up +138% y/y, or roughly +40% on a pro forma basis, ahead of consensus expectations of +36.7%/+36.3%. Highlight is EBITDA of $195M significantly beat consensus at $157M
The upside was driven primarily by a $368M contribution from the Alani Nu acquisition, while core branded Celsius revenue increased +6% y/y versus +10% estimate.
North America revenue grew +144%, or +39% pro forma, ahead of consensus estimates of +36.0%, while International sales were notably stronger at +55% versus consensus estimates of -2.7%. Gross margin came in broadly in line at 48.3%, versus consensus at 48.6%, with pressure from the lower-margin Alani Nu and Rockstar businesses partially offset by COGS improvement and purchasing synergies.
Management also reiterated that margin expansion initiatives remain on track, though partially tempered by rising commodity costs. Overall, Q1 adjusted EPS of $0.41 was well ahead of our/consensus at $0.30, while adjusted EBITDA of $195M significantly beat our/consensus at $157M.
Given the magnitude of the beat and strong operating leverage, CELH will outperform today.
BROS -5%: PROFIT TAKING BUT STILL A STRONG PRINT
Strong beat-and-raise across the board with system SSS blowing past Street and FY26 guide raised on every key metric.
Revenue $464.4M, +30.8% y/y (last q +30.0%) vs Street ~$446M.
System SSS +8.3% vs Street +5.8%, with co-owned SSS +10.6% vs Street +6.6% and traffic +5.1% (Texas comps ~+20%).
Adj. EBITDA $79.4M, +26.2% y/y vs Street $73.7M. Shop-level margin 28.3% vs Street ~27.8%, with sales leverage offsetting elevated coffee, rent (BTS lease shift ~50bp headwind), and R&M. Mgmt raised FY26 system SSS to +4-6% (from +3-5%), revenue to $2.05-2.08B, and adj. EBITDA to $370-380M (from $355-365M). 2Q26 SSS guided to “approaching +5%” vs prior Street ~4.7%. Stock traded lower after-hours despite the print, suggesting buyside bar was elevated into the quarter.
1. Key Takeaways
Beat-and-raise with no cracks. Top-line, comps, margins, and FY guide all moved higher. Mgmt sees no measurable impact from macro, gas prices, or competitive intensity (SBUX Refreshers launch, MCD encroachment). 2Q QTD momentum holding.
Texas is the proof point. ~+20% SSS in a market facing the most competitive intrusion directly rebuts the bear thesis on share loss. Mgmt leaned into this on the call.
Food rollout ahead of plan. In 485 system shops at quarter-end, co-owned rollout now finishing by end of 3Q (pulled from 4Q). Food attach in low-teens, ahead of test, with SSS lifts exceeding the +4% target.
Myst energy launch (early May) — plant-based, low-cal, functional energy platform. Potential new occasion/customer driver, could go permanent. SBUX Refreshers concern looks “overdone” per sell-side.
Digital flywheel building. Rewards mix at new high of 74%, order-ahead at 15%, in-app personalization improving. Pricing kept modest at +1.5% in 1Q (likely flat-to-down in 2H), preserving value prop while comps run hot.
Setup was the issue, not the print. Buyside bar drifted higher into the quarter; AH weakness reflects positioning, not fundamentals.
2. KPIs vs. Street
System SSS: +8.3% vs Street +5.8% (last q +7.7%). 2Q guide “approaching +5%” vs Street +4.7%. FY26 raised to +4-6% from +3-5%.
Co-owned SSS: +10.6% vs Street +6.6%, with traffic +5.1% on system basis (+6.9% co-owned). Traffic-led beat, not ticket-led — high-quality composition.
Price/Mix: Pricing just +1.5% in 1Q, stepping down or flat in 2H. Beat is volume/traffic-driven, which mgmt and sell-side view as more durable than price-led comps.
Revenue: $464.4M vs Street ~$446M, +30.8% y/y. FY26 raised to $2.05-2.08B; sell-side modeling $2.06-2.10B (above high end).
Shop-Level Margin: 28.3% vs Street ~27.8%. Sales leverage on labor and COGS (lower dairy) offset higher coffee, rent (BTS lease mix shift, ~50bp FY headwind), and R&M. FY26 RLM outlook improved.
Adj. EBITDA: $79.4M vs Street $73.7M, +26.2% y/y. FY26 raised to $370-380M from $355-365M; sell-side now at $375-385M (above high end again).
Inventory: $44.9M, down sequentially from $48.9M in 4Q25 — clean, no build-up signal.
Unit Growth: Pipeline on track for 16%+ system unit growth in ‘26. New urban no-drive-thru LA format being watched as TAM expander.
3. Bull vs. Bear Debate
Bulls see BROS as a rare consumer compounder with multi-year visibility into both unit growth (16%+ system) and same-store sales drivers (food, Myst, rewards/digital, throughput, LTOs). The thesis is that the brand is genuinely differentiated — drive-thru-only, customizable cold beverages, energetic operator culture — and that the market is mistakenly lumping it in with mature QSR coffee names facing real share pressure. Unit economics remain best-in-class, the model is replicable across geographies (Texas being the live experiment), and mgmt has consistently underpromised and overdelivered on the SSS algorithm.
This quarter added meaningful ammo: SSS +8.3% with traffic +5.1%, Texas at ~+20% in the face of intensifying competition, food ahead of test, FY guide raised across the board, and explicit commentary that SBUX Refreshers and gas prices aren’t moving the needle. Bulls argue the raised FY26 guide of +4-6% comp is still conservative given 2Q QTD trends and the Myst/food contributions ramping. On valuation, bulls see ~$385M FY26 EBITDA growing ~25% to ~$480M in ‘27, and apply a 32x multiple on ‘27 EV/EBITDA = ~$83 PT. The premium-to-peers multiple is justified by the unit growth runway and SSS visibility that fast-casual peers can’t match.
Bears focus on valuation and the eventual collision with reality. At ~45x ‘27 EPS and ~21x ‘27 EBITDA, BROS is priced for perfection in a category where SBUX, MCD, and regional players are all stepping up cold-beverage and energy investment. The bear argument is that drive-thru coffee comps inevitably mean-revert as the unit base matures, that cannibalization will accelerate as density builds in core markets, and that the brand premium erodes once a Refreshers-type product is on every corner. GLP-1 risk and a discretionary beverage occasion add tail risk.
This quarter bears can still point to: (1) margin beat magnitude trailing the top-line beat (occupancy +138bp headwind from BTS shift), (2) compares getting harder in 2H, (3) AH stock reaction confirming the buyside bar was already above sell-side, and (4) the implicit reliance on food and Myst to sustain the SSS algo as base coffee comps eventually normalize. Bears model FY27 EBITDA closer to $405M with multiple compression to ~20x = ~$46 downside case (~22% below current). The pair trade for bears is long SBUX/short BROS on multiple convergence.
SHAK -20%: SOFT QUARTER DRIVEN BY WEAKER-THAN-EXPECTED EARNINGS AND COMPS
SHAK reported a meaningful Q1 EBITDA miss, with EBITDA of $37M versus the Street at $45M. Management attributed the shortfall primarily to weather-related disruption, while noting that underlying demand trends remain healthy.
In terms of guidance, Full-year EBITDA outlook was only modestly reduced to $230M-$245M versus the prior $237M-$245M, suggesting limited change to the broader earnings trajectory. The company also raised its 2026 unit growth plan, now expecting 60-65 new openings versus the prior 55-60 range.
WHR -20%: BIG MISS, GUIDE SLASHED, DIVIDEND SUSPENDED; TARIFF MATH IS THE ONLY BULL LEG LEFT
Revenue $3.273B, -6.1% organic vs Street ~flat.
Adj EBIT $44M at 1.3% margin vs Street ~3.3% (BofA $114M). Adj EPS $(0.56) vs cons +$0.36 / Street $0.37. MDA NA organic -7.8% on volume + IEEPA refund-driven price/mix; SDA Global +9.5% on volume; MDA LatAm -3.8% ex-FX. Dividend suspended to prioritize $900M of 2026 debt paydown post equity raise.
Key Takeaways
Dividend suspended — material narrative break; mgmt prioritizing debt redux after dilutive equity issuance, signals balance sheet stress is the gating issue.
2026 guide gutted across the board: Revenue to ~$15B (from $15.3-15.8B), EBIT margin to ~4% (from 5.5-5.8%), EPS to $3.00-3.50 (from $6.00 post-raise), FCF to $300M+ (from $400-500M), CFO to $600M (from $800M).
Guide cut bridge: ~75bps raw mat inflation, ~25bps price/mix, ~50bps net tariff drag. MDA NA industry now down 5% (from ~flat).
Tariff is the bull case: Section 232 puts 25% on all major appliance imports; China stacks Section 301 (7.5-25%) for total 32.5-50% exposure on imports vs ~5% for WHR given U.S. manufacturing footprint = 500-1,000bps relative cost advantage.
Mgmt response: Largest price increase in a decade — pricing stepped up from 2% in Feb to ~5% in Mar/Apr, outpacing competitors. Demand destruction is the open question.
Cost offset: $150M+ in 2026 cost savings being pulled forward.
AHAM sell-in -7% YTD with March worsening (-10%) — demand is actively deteriorating, not stabilizing.
Beko Europe BV drove $0.32 of the EPS miss.
COST UNCH : SLIGHT MISS ON COMPS BUT STORY REMAINS STRONG / UNCHANGED.
April SSS missed (7.8% vs. 8.4% cons) but did accelerate MoM (6.2% in march). Comps ex-gas were 8.0% (vs. 8.1% cons).
April had one additional shopping day compared to last year due the Easter calendar shift, which positively impacted total and comparable sales by ~1.5-2%. Management also mentioned that they had overestimated the negative impact of Easter last month. COST noted the negative impact of cannibalization was ~40 bps for the company in April.
While the company is still receiving incremental traffic from consumers seeking value on gas, management noted this could potentially be offset by slight consumer pressure on the core comp. However, management stated they are not seeing anything concerning in the macro environment for April and that it is possible the lower conversion rate is simply a result of consumers not having additional needs when they stop for gas.
Analyst Actions
QSR: SCOTIABANK RAISES PT TO 83 FROM 81, BAIRD RAISES TO 80 FROM 72, BOTH MAINTAIN NEUTRAL
Restaurant Brands International saw two sell-side PT revisions higher this morning. Scotiabank’s John Zamparo lifted his target to $83 from $81 while maintaining a Sector Perform rating. Baird’s David Tarantino raised his target more meaningfully to $80 from $72 while maintaining a Neutral rating.
FRPT: JPM UPGRADES TO OVERWEIGHT WITH 68 PT
JPMorgan’s Thomas Palmer upgraded the stock from Neutral to Overweight with a $68 price target, calling out a more constructive view on the pet category and FRPT’s positioning. The firm expects Freshpet’s sales and EBITDA growth to outpace its staples peers, and does not think the stock’s current valuation sufficiently reflects this. Freshpet could raise its long-term gross margin target when it reports Q2 earnings, JPMorgan contends. A variety of new brands are entering the fresh pet food space, “but consistent with the past, their traction seems to be limited up to this point,” the firm adds.
MAR: BAIRD LOWERS PT TO 386 FROM 388, MAINTAINS NEUTRAL
Baird’s Michael Bellisario nudged his price target on Marriott to $386 from $388 while maintaining a Neutral rating. A small revision and effectively a non-event on rating. The maintained Neutral despite hotels being a beneficiary of any oil/Hormuz de-escalation suggests the desk is comfortable with current estimates but not finding enough upside for a re-rating. Watch read-throughs to other lodging names (HLT, H, IHG) on the broader macro setup.
LULU: BAIRD LOWERS PT TO 170 FROM 190, MAINTAINS NEUTRAL
Baird’s Mark Altschwager cut his price target on Lululemon to $170 from $190 while maintaining a Neutral rating — a meaningful ~10% cut that signals continued estimate revisions in the high-end athletic space. The maintained Neutral suggests the desk sees the cut as catching down to fair value rather than signaling further deterioration, but the magnitude points to ongoing concern about U.S. comp trajectory and brand momentum in athleisure.
YETI: BOFA RAISES PT TO 44 FROM 37, MAINTAINS NEUTRAL
BofA’s Alexander Perry raised Yeti’s PT to $44 from $37 while maintaining Neutral. YETI reports 1Q26 results May 14, and BofA believes 1Q26 and 2026 estimates are well calibrated, with 1Q26 EPS of $0.18 and FY26 EPS of $2.81 (vs prior $2.85) in line with consensus. Two key themes into the print: any update on product enhancements and confidence in the 2H26 earnings acceleration.