Darden Restaurants Q3 Adj. EPS Meets Estimates, Sales Miss

(RTTNews) - Restaurant company Darden Restaurants, Inc. (DRI) reported Thursday that profit for the third quarter increased from last year, driven by sales growth across all segments. Adjusted earnings per share met analysts' estimates, while quarterly sales missed it. The company also raised its adjusted earnings guidance for the full-year 2024, while trimming annual sales and same-restaurant sales growth outlook.

"Each one of our segments grew sales and profit in an operating environment that was tougher than we anticipated, and we continued to outperform industry same-restaurant sales and traffic," said President & CEO Rick Cardenas.

For the third quarter, net earnings increased to $312.9 million or $2.60 per share from $286.6 million or $2.34 per share in the prior-year quarter.

Excluding items, adjusted earnings were $2.62 per share, compared to $2.34 per share in the year-ago quarter.

On average, 24 analysts polled by Thomson Reuters expected the company to report earnings of $2.62 per share for the quarter. Analysts' estimates typically exclude special items.

Total sales for the quarter grew 6.8 percent to $2.97 billion from $2.79 billion in the same quarter last year, driven by addition of 79 company-owned Ruth's Chris Steak House restaurants and the addition of 53 other net new restaurants. Analysts expected revenues of $3.02 billion for the quarter.

Sales at Olive Garden segment increased to $1.31 billion from $1.30 million, with same-restaurant sales drop of 1.8 percent. LongHorn Steakhouse segment sales grew to $730.7 million from $695.5 million, with same-restaurant sales growth of 2.3 percent.

Sales at Fine Dining segment surged to $372.9 million from $235.6 million last year, with same-restaurant sales decline of 2.3 percent.

Darden's Board of Directors also declared a regular quarterly cash dividend of $1.31 per share on the Company's outstanding common stock, payable on May 1, 2024 to shareholders of record at the close of business on April 10, 2024.

On Wednesday, Darden's Board of Directors authorized a new share repurchase program under which the Company may repurchase up to $1 billion of its outstanding common stock.

Looking ahead to fiscal 2024, the company updated its financial outlook, which includes Ruth's Chris operating results, but excludes approximately $55 million, pre-tax, of expected transaction and integration related costs associated with the acquisition.

The company now projects adjusted net earnings from continuing operations in a range of $8.80 to $8.90 per share on total sales of approximately $11.4 billion, with same-restaurant sales growth of 1.5 to 2.0 percent. It also expects 50 to 55 new restaurant openings.

Previously, the company expected net earnings from continuing operations in the range of $8.75 to $8.90 per share on total sales of approximately $11.5 billion, with same-restaurant sales of 2.5 to 3.0 percent.

The Street is currently looking for earnings of $8.86 per share on total sales of $11.51 billion for the year.

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