Volkswagen AG has slashed the cost of developing electric vehicles for the Indian market by nearly one-third and is actively scouting for a domestic partner to revive its long-stagnant presence in the country, according to people familiar with the matter. Europe’s largest automaker has brought down its EV platform development cost for India to about $700 million from the earlier estimate of $1 billion, the people said, requesting anonymity. The reset reflects the company’s reluctance to continue committing ...

You can find original article here Nrn. Subscribe to our free daily Nrn newsletters. Portillo’s Inc. is experiencing some growing pains after a period of overeager development in new markets.  The Chicago-based fast-casual company is in the midst of a strategic reset after opening too many locations too quickly near each other, particularly in the Texas market, Portillo’s interim CEO Michael Miles said during the company’s third-quarter earnings call Tuesday. As a result, the company will pull back ...

Financial Data and Key Metrics Changes - Revenues for Q3 2025 were $181.4 million, an increase of $3.2 million or 1.8% year-over-year, driven by non-comparable restaurants [13] - Same restaurant sales declined by 0.8%, resulting in a revenue decrease of approximately $1.2 million, attributed to a 2.2% decrease in transactions, partially offset by a 1.4% increase in average check [13] - Restaurant-level Adjusted EBITDA decreased by $5.3 million to $36.7 million, with margins dropping 330 basis points to 20.2% [17] - Adjusted EBITDA was $21.4 million, a decrease of 23.4% from the prior year [19] - Cash from operations decreased by 32.3% year-over-year to $48.7 million year-to-date [20] Business Line Data and Key Metrics Changes - The company experienced pressures on margins from non-comparable restaurants, with restaurant-level Adjusted EBITDA margins estimated to be in the range of 21%-21.5% for 2025 [17] - Other operating expenses increased by $2.3 million or 10.8% compared to the prior year, primarily due to new restaurant openings and increased repair and maintenance costs [15] Market Data and Key Metrics Changes - The company plans to open eight restaurants in 2026, with a focus on gradual growth and avoiding cannibalization in existing markets [31] - The company is leveraging affiliate marketing and catering to expand reach in new markets [10] Company Strategy and Development Direction - The company announced a strategic reset, slowing development in 2025 and 2026, and focusing on delivering an outstanding guest experience [6][7] - A smaller-format restaurant model is being deployed to achieve good unit economics with sales of $4 million to $5 million [9] - The company aims to drive more transactions through its unique menu offerings and the Portillo's Perks Loyalty Program [10] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's growth potential, citing strong customer demand in new markets [4] - The company anticipates commodity inflation of 3%-5% in 2025, with significant pressures coming from beef prices [14][35] - The effective tax rate for the full year is expected to be approximately 21%-23% [20] Other Important Information - The company recorded a non-cash impairment charge of $2.2 million related to the Barnelli's trade name [18] - The company ended the quarter with $17.2 million in cash and $323 million in total net debt [20] Q&A Session Summary Question: Marketing efficacy and strategy moving forward - Management acknowledged the need to drive trial and awareness in newer markets and emphasized ongoing marketing investments in both new and core markets [22][24] Question: Pricing strategy and value perception - Management indicated that current pricing is below industry inflation rates and emphasized the importance of driving traffic into restaurants [26][27] Question: Development plans for 2026 - Management confirmed plans to open eight restaurants in 2026, with a focus on gradual growth and potential expansion in new markets [30][31] Question: Commodity costs and labor inflation - Management noted ongoing pressures on beef costs and confirmed labor inflation guidance of 3%-4% for the year [33][35] Question: Consumer behavior and marketing efforts in Texas - Management reported no noticeable shifts in consumer behavior by demographic cohorts but emphasized focused marketing efforts in Texas to drive brand awareness [45][48]

Core Insights - Portillo's has initiated a "strategic reset" of its growth plans, focusing on core markets, enhancing unit economics, and discontinuing its breakfast pilot in Chicago [1][5] - The company has revised its full-year same-store sales outlook to a decline of -1.5% to -1%, down from a previous forecast of 1% to 3% [1] - Portillo's plans to open eight new units this fiscal year, a reduction from the earlier target of 12 [1] Strategic Focus Areas - The company aims to drive sustainable traffic through consistent service and value, and to pursue disciplined development with a focus on strong unit economics and efficient capital deployment [2] - Key priorities include driving transactions by reinforcing value and service, simplifying operations, and optimizing capital deployment to achieve positive free cash flow by 2026 [8] Market Context - The competitive landscape remains challenging, with limited-service traffic down 1.2% in August compared to the previous year, influenced by competitors like McDonald's [3] - Portillo's has acknowledged a slow start in new markets, particularly Texas, and is increasing marketing investments to boost brand awareness [5] Leadership Changes - Denise Lauer has been appointed as the new Chief Marketing Officer, effective September 22, bringing experience from her previous roles at Marco's Pizza and other brands [6][7]

Financial Data and Key Metrics Changes - Statutory NPAT for FY 2025 was $28.1 million, including $52.3 million in post-tax significant items, reflecting a challenging year [40] - Pro forma NPAT decreased by 8.4% to $80.4 million, with group revenue declining by 1.5% [40][41] - EBITDA grew by 5.2% year-over-year, despite a decline in pro forma impact by 8.4% [7][40] Business Line Data and Key Metrics Changes - Trade business revenue grew by 1.3% and EBITDA by 5.4%, while Specialist Wholesale saw a decline in revenue by 3.2% but an increase in EBITDA by 5.2% [24][25][30] - Retail revenue declined by 3.5%, with a significant impact from lower discretionary spending and higher operating costs [32][33] Market Data and Key Metrics Changes - New Zealand's revenue declined by 3.2% in Australian dollar terms, reflecting challenging economic conditions [35] - The company experienced a shift away from discretionary retail spending, impacting overall revenue performance [24][32] Company Strategy and Development Direction - The company outlined six strategic imperatives: optimizing the network, one supply chain, customer focus, digitalizing the business, store fitness, and simplifying the business [14][50] - A strategic reset is underway, focusing on long-term sustainable profitability and cultural changes within the organization [5][11] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the challenges faced in FY 2025 but expressed confidence in the company's ability to recover and grow in FY 2026 [6][51] - The focus will be on driving organic growth and improving operational efficiency through supply chain enhancements and digitization [51][52] Other Important Information - The company declared a final dividend of $0.55 per share, representing a full-year payout ratio of 57% [11] - Significant changes in the balance sheet were made to ensure financial clarity moving into FY 2026 [42][45] Q&A Session Summary Question: Outlook for the trade segment and recovery focus - Management emphasized the importance of recovery in the trade segment, linking it to overall group strategy and sales performance [55][56] Question: Cost allocation and expectations for FY 2026 - Management indicated that a significant reorganization is underway, and clarity on cost allocations will be provided in future quarters [58] Question: Expectations for achieving sales CAGR and EBITDA CAGR - Management committed to providing updates on progress towards five-year goals as results are reported, without giving specific guidance for FY 2026 [61] Question: Impact of loyalty program on sales - Management acknowledged the early stages of the loyalty program and its potential impact on sales, but specific metrics were not available [70][72] Question: Market share trends in trade and retail - Management noted that while market share was stable over the year, there were periods of decline, particularly in May and June [90] Question: Plans for store closures and profitability - Management confirmed ongoing evaluations of store performance and plans to close underperforming locations as necessary [102][105]

Financial Performance - Pro-forma revenue reached $19435 million, a decrease of 15% compared to FY24[15] - Pro-forma gross margin was 465%, a slight increase of 3 bps compared to FY24[15] - Pro-forma NPAT was $804 million, down 84% compared to the previous corresponding period[15] - Statutory NPAT was $281 million, including significant items of $523 million post-tax[17] - Net debt stood at $3648 million, an increase of 82% compared to FY24[15] - Cash conversion rate improved to 818%, compared to 769% in the previous corresponding period[15] Strategic Initiatives - The company closed or relocated 70 sites, including consolidating 23 smaller warehouses[17, 18] - The company opened 21 new branches and stores[17, 18] - $47 million of inventory was centralized as part of the supply chain consolidation[28] - The Autobarn loyalty program was strengthened, adding 500,000 new members, bringing the total to 17 million[29, 30]