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Longhorn Steakhouse in Thornton, Colorado, United States, on Friday, March 19, 2021. Darden Restaurants, Inc. is scheduled to release earnings numbers on March 25.
weird shit | bloomberg | Getty Images
Darden Restaurants Thursday mentioned Quarterly earnings beat Wall Street expectations, buoyed by strong sales from LongHorn Steakhouse.
But investors were disappointed by the company’s outlook for the 2024 fiscal year. Darden expects adjusted earnings per share from continuing operations of $8.55 to $8.85, but analysts polled by Refinitiv were expecting earnings of $8.79 per share for the fiscal year.
The company’s shares fell more than 3% in morning trading. Prior to its earnings report, the stock was nearing an all-time high of $168.98, which was set on June 15th.
Here’s what the company reported compared to what Wall Street was expecting, based on a survey of analysts conducted by Refinitiv:
- Earnings per share: $2.58 vs. $2.54 expected
- Revenue: $2.77 billion, meeting expectations
Darden reported net income for the fiscal fourth quarter of $315.1 million, or $2.58 per share, up from $281.7 million, or $2.24 per share, a year earlier.
Net sales It rose 6.4% to $2.77 billion.
The company’s same-store sales increased 4%, driven by strong performance at LongHorn Steakhouse. The steakhouse chain posted same-store sales growth of 7.1%, beating StreetAccount’s estimate of 4.9%.
But Olive Garden, which accounts for about 45% of Darden’s sales, posted a weaker-than-expected quarter. Italian same-chain store sales rose 4.4%, below expectations for 5% growth.
Darden’s fine dining segment posted same-store sales declines of 1.9%. The department includes The Capital Grille and Eddie V’s.
Executives said they expect softer sales for the fine dining during the first quarter of the fiscal year. Traffic at its fine dining restaurants has doubled in the past three quarters compared to 2019 levels, but the sector still faces tough comparisons as demand rose a year ago.
“We expect year-over-year traffic to stabilize after the first quarter,” Chief Financial Officer Raj Venam told investors on the company’s conference call.
In the next quarter, the company’s fine dining options will also include Ruth’s Chris Steak House, which the company purchased for $715 million. Darden’s results for the quarter, which ended May 28, do not include the most recent addition because the company completed the acquisition on June 14.
Looking to fiscal 2024, Darden expects 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.
Its earnings forecast excludes about 34 cents a share, after tax, of expenses related to the Ruth’s Chris integration. The rest of its 2024 financial projections include operating results for Chris of Roth.
The restaurant company also expects capital expenditure of $550 million to $600 million and overall inflation of 3% to 4%. The company expects to raise list prices by 3.5% to 4% in response to rising costs, particularly for labor.
The company also announced that former CEO Jin Lee plans to step down as chairman. Lee retired just over a year ago as CEO. He will not run for re-election at the company’s annual shareholder meeting, which is scheduled for Sept. 20.
“I am proud of what we have accomplished and believe Darden is well positioned to continue to grow and thrive for years to come,” Lee said in a statement.
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