An indication hangs on the front of an Olive Garden restaurant in Chicago, Illinois on June 22, 2023.
Scott Olsen |
Restaurants Darden reported weaker-than-expected quarterly earnings and revenue on Thursday, as sales at Olive Garden and its fine-dining restaurants fell.
“While we fell short of our expectations in the first quarter, I firmly believe in the strength of our business,” CEO Rick Cardenas said in a press release. “I am confident in the actions all of our brand teams are taking to meet the needs of their guests and will not compromise the long-term health of our business for short-term gains.”
Despite the outcomes, the corporate’s shares rose about 10 percent in premarket trading. Excluding Thursday’s gains, the stock has fallen 3 percent this 12 months as investor concerns about consumer health weigh on the restaurant industry overall.
Here’s what the corporate reported for the quarter ended August 25, in comparison with Wall Street expectations, based on an analyst survey conducted by LSEG:
- Earnings per share: USD 1.75 adjusted versus USD 1.83 expected
- Revenue: $2.76 billion in comparison with expected $2.8 billion
Darden reported net income of $207.2 million, or $1.74 per share, for the fiscal first quarter, up from $194.5 million, or $1.59 per share, a 12 months earlier.
Excluding the price of shopping for Tex-Mex chain Chuy’s, the restaurant company earned $1.75 per share.
Net sales rose 1% to $2.76 billion, but the corporate’s comparable-store sales fell 1.1% within the quarter. Customer traffic at its restaurants fell sharply in July but then rebounded, said CFO Raj Vennam. Executives at other restaurant corporations have also reported that customer traffic has declined this summer, reflecting increased travel or much more cautious diners.
Olive Garden’s sales fell 2.9% within the quarter. In hopes of winning back customers, the chain is relaunching its Never Ending Pasta Bowl later this month.
Darden’s nice dining segment, which incorporates Eddie V’s and The Capital Grille, reported a 6% decline in comparable-store sales.
LongHorn Steakhouse was the one division of the corporate to report comparable-store sales growth. The chain, a top performer in Darden’s portfolio because the pandemic, posted comparable-store sales growth of three.7%.
Darden bought Chuy’s Holdings in July for about $605 million, its second acquisition in two years. The company expects the Chuy’s deal to shut within the second quarter of the fiscal 12 months, when Ruth’s Chris Steak House results may also be reflected within the stores’ sales figures. Darden bought Ruth’s Chris a bit of over a 12 months ago.
Despite the dismal quarter, Darden reiterated its full-year outlook. For fiscal 2025, the corporate forecasts earnings per share from continuing operations of $9.40 to $9.60 and net sales of $11.8 billion to $11.9 billion.
