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Bulls Take a Hit

Brinker, parent of restaurant chain Chili's (down 17 percent on 5x normal volume), is a real shot across the bow for bulls who are hoping for an improvement in sales trends in the second half.

Management provided FY 2010 earnings guidance in the range of $1.15-$1.30, well below the $1.59 Street consensus. This fiscal year starts this quarter, so we are talking about the second half of 2009 into the first half of 2010.

Remember the theory here for stocks:

1) sales trends will improve in the second half

2) comps in the second half will be easy because last year was a disaster; but the company is guiding comp store sales for the full year to be down 2 to 4 percent, hardly implying a big recovery.

The improving sales trend theory is certainly not panning out for Brinker; bears insist there will be other such stories, in restaurants, retail, and other sectors.

Margin improvement due to cost cuts is a first half story.

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