Brew Markets Daily – "Activist Fit-Checks Lululemon & Longhorn’s Earnings Are Well Done"
Host: Anne Barry
Date: December 18, 2025
Overview
This episode of Brew Markets Daily dives into major market stories impacting investors: a substantial activist investor move into Lululemon, standout earnings from Darden Restaurants (parent to Olive Garden and Longhorn Steakhouse), and the struggles of CarMax amid digital disruption in the used car market. The episode concludes with key macroeconomics updates, a tech highlight on Micron’s results, and travel industry tidbits.
Key Discussion Points
1. Activist Investing Heats Up: Elliott Management Targets Lululemon
[00:35–05:01]
- Role of Activist Investors: Anne defines activist investors as those who "buy significant stakes in public companies to pressure management for changes, all in a push to boost shareholder returns."
- Recent Elliott Activity: Highlights include Elliott’s influential purchases and strategic shakeups at BP, Medtronic, PepsiCo, and Workday, showing a broad cross-sector influence.
- Lululemon in Focus:
- Elliott reportedly takes a significant stake, sending Lulu’s stock up 6%.
- Lululemon stock is down 40% over the past year—facing weak U.S. consumer demand, tariff issues, and heavy competition.
- Founder Chip Wilson voices concern that the brand is "losing its soul."
- CEO Calvin McDonald stepping down in January. Elliott is rumored to favor Jane Nielsen (ex-Ralph Lauren COO, ex-Coach CFO) for the top job, given her reputation for turnarounds.
- Anne’s forecast: "In 2026, with lower interest rates supporting deal activity and public companies facing pressure to prove out even more growth...I expect to see a lot more [activism] coming up." [04:16]
- Insight: Established activist moves can represent valuable signals for the rest of the market, especially when operational changes can create new value after rigorous investor research.
2. Darden Restaurants: Earnings “Well Done”
[05:15–12:27]
Sales & Growth
- Darden’s Q4 sales: $3.1 billion (up 7% year-over-year).
- Same-restaurant sales growth: 4.3%.
- Full-year sales forecast bumped to 8.5–9.3% growth (was 7.5–8.5%).
- Plans to open 65 new locations in fiscal 2026.
Olive Garden & Longhorn Steakhouse Standouts
- Olive Garden: $1.4bn in sales (+5.4% YOY).
- Longhorn Steakhouse: $776M (+9% YOY).
- Anne shares: “Five years ago, I won one of these golden tickets. I had all-you-could-eat Olive Garden for 10 weeks...I couldn’t do it more than [two days in a row].” (08:32–09:04)
Operational Highlights
- Record high “refill rates” for Olive Garden’s never-ending pasta deal, a sign of value-seeking customers.
- Expansion of lower-priced, smaller portion entrees as a direct response to consumer and GLP-1 drug trends. “That is the response to GLP-1 and it’s sort of the opposite to the never ending pasta.” — Anne [10:56]
- Uber Direct partnership: Attracting “younger, more affluent guests who crave Olive Garden at home.” — John [10:34]
Cost Pressures & Beef Market
- Beef makes up 25% of Darden’s food spend; beef prices “sustained longer than anticipated.”
- Tariff rollbacks on beef from South America offer some relief, but inflationary pressures persist.
- Analyst insight: Some consumers may opt to dine out when at-home beef prices are up 16% YOY but steakhouse inflation is less steep (~3%): “I'm going to go out to a steakhouse where it might only be 3% more expensive...and it's a treat.” — Anne [12:09]
Market Reaction
- Darden shares up ~2% after earnings, +21% YTD.
3. CarMax Struggles as Digital Disruption Bites
[12:27–18:20]
- CarMax earnings: $0.43/share (beat estimates), $5.8bn revenue (also a beat, but down 7% YOY).
- Comparable (same-store) unit sales: Down 9% YOY.
- CarMax lags as Carvana (its digital rival) thrives—CarMax “owns” its digital shortcomings: "They need to get their digital experience to get a lot better." — John [13:55]
- Retail/wholesale unit sales both down; vehicle purchases from consumers off 12%.
- Leadership shakeup: CEO Bill Nash ousted, David McCreet interim CEO, signals turnaround intent.
- McCreet: “Our average selling prices have drifted upwards and appear to be less attractive to customers.” [15:17]
- Strategic response: Considering price cuts and heavier marketing—likely to pressure near-term earnings.
- Market context: Overall used car market volumes strong, but CarMax is losing share.
- Carvana: Shares up 127% YTD, about to join S&P 500. “That business was really on the cusp…who would have thunk it?” — John [16:08]
- Amazon enters the space with partnerships for online used car sales, a potential disruptor: "I would keep eyes on Amazon if I were Carvana right now." — Anne [17:12]
- CarMax shares down 3.25% on the day, -50% YTD.
4. Macro & Market Headlines
[19:17–24:17]
Inflation Data
- November consumer prices up 2.7% YOY (CPI), a “meaningfully better” print versus 3.1% expected.
- Markets rallied on the news, but economists urge caution as October CPI data is missing (shutdown delays); trend is harder to analyze but offers relief from stagflation fears.
Micron Technology Crushes Earnings
- Micron stock +12% after earnings.
- Products: DRAM, NAND, NOR memory (used in everything from PCs to medical devices).
- Market for high-bandwidth memory projected to reach $100B by 2028 (~40% CAGR).
- Revenue: $13.6bn this quarter, up 60% YOY; gross profit margins >50%.
- "That is pretty healthy...This is the kind of profile I love to see." — Anne [21:08]
Airlines: M&A and Loyalty Program Shifts
- Spirit & Frontier rumored to revive merger talks after a previously failed and JetBlue-thwarted deal.
- American Airlines will stop awarding frequent flyer miles/status on basic economy tickets, shifting value to premium fares: “A bit of a Grinch move before the holidays…could this have waited till January?” — Anne [23:41]
Notable Quotes and Moments
- Anne Barry on Elliott’s pace: “If that's anything to go by, I'm almost out of breath describing all that activity. Lululemon is in for a ride.” [03:56]
- John Curto on Darden: “The key thread there as I think about these brands...is steak...that was a critical part of the message we got out of Darden today.” [06:14]
- Anne Barry’s Olive Garden story: “Five years ago, I won...all-you-could-eat Olive Garden for 10 weeks...I became popular at the Olive Garden because the manager was excited one of the national promotions had occurred at his restaurant.” [08:39–09:10]
- John on Carvana: "That business was really on the cusp…who would have thunk it now going…into the elite club…that’s the S&P 500." [16:08]
- Anne on Amazon’s creep into used cars: “I do think that Amazon has a pattern of testing the waters...getting tons of data, seeing what's working and if it does work, doubling down.” [17:02]
Key Timestamps
- 00:35–05:01: Elliott Management’s activist interventions & Lululemon
- 05:15–12:27: Darden Restaurants earnings, Olive Garden/Longhorn focus, consumer behavior, inflation impacts
- 12:27–18:20: CarMax struggles, Carvana’s rise, Amazon’s disruption
- 19:17–21:46: Market closes, CPI/inflation report, impact on stocks
- 21:08–22:39: Micron Technology’s results, semiconductor market trends
- 22:39–24:17: Airlines—merger rumors, loyalty program changes
Summary
This episode captures the energy of a shifting market landscape: activist investors are on the prowl for value (with Lululemon in the spotlight), restaurant giants like Darden harness the power of both value deals and menu innovation to outperform, and legacy businesses like CarMax are under siege by digital upstarts and e-commerce giants. Meanwhile, easing inflation provides broad market relief, big tech like Micron soars on AI/data tailwinds, and consumer dynamics—from steakhouse visits to airline perks—reflect the changing economy. Anne and John keep the tone witty and conversational, peppering serious financial analysis with lively personal anecdotes and memorable asides.