Olive Garden parent Darden Restaurants beats earnings estimates, despite weak fine dining sales

Earnings

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A customer carries an Olive Garden shopping bag in Pittsburg, California, US, on Friday, Dec. 9, 2022. 
David Paul Morris | Bloomberg | Getty Images

Darden Restaurants on Thursday reported earnings and revenue that topped analysts’ expectations in its first quarter as the owner of Ruth’s Chris Steak House.

But same-store sales of Darden’s fine-dining segment fell more than expected, signaling that consumers are spending less on upscale restaurant meals.

Shares of the company fell more than 1% in premarket trading.

Here’s what the company reported for the quarter ended Aug. 27 compared with what Wall Street was expecting, based on a survey of analysts by LSEG, formerly known as Refinitiv:

  • Earnings per share: $1.78 adjusted vs. $1.74 expected
  • Revenue: $2.73 billion vs. $2.71 billion expected

Darden reported fiscal first-quarter net income of $194.5 million, or $1.59 per share, up from $193 million, or $1.56 per share, a year earlier.

Excluding its acquisition of Ruth’s Chris, integration costs related to the deal and other items, the restaurant company earned $1.78 per share from continuing operations.

Net sales rose 11.6% to $2.73 billion.

Darden’s same-store sales, excluding those of Ruth’s Chris, rose 5% in the quarter.

The company won’t include Ruth’s Chris in its same-store sales results until it has owned the steakhouse chain for 16 months. The $715 million acquisition was completed in mid-June.

LongHorn Steakhouse was the top performer in Darden’s portfolio this quarter. The chain reported same-store sales growth of 8.1%, topping StreetAccount estimates of 6.1%.

Olive Garden, which accounts for roughly 45% of Darden’s revenue, reported same-store sales growth of 6.1%, meeting expectations.

Darden’s fine-dining restaurants saw same-store sales shrink 2.8%, wider than expectations of a 1.8% decline. The segment includes The Capital Grille and Eddie V’s, but its same-store sales metric doesn’t yet include Ruth’s Chris.

Darden also reiterated its outlook for fiscal 2024. The company is forecasting net sales of $11.5 billion to $11.6 billion, same-store sales growth of 2.5% to 3.5%, and adjusted earnings per share from continuing operations of $8.55 to $8.85.

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