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Darden Restaurants on Thursday reported mixed quarterly results but still affirmed its outlook for fiscal 2023.
The parent company of Olive Garden and LongHorn Steakhouse reported net sales for the quarter rose 6.1% to $2.45 billion, missing Wall Street expectations. CEO Rick Cardenas previously said the company plans to price below competitors and limit how much of its increased costs it passes on to diners.
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During the quarter, the company’s food, beverage and labor costs rose, weighing on its operating profit.
The company’s shares fell 2% in premarket trading.
Here’s what the company reported for the quarter ended Aug. 28, compared with what Wall Street expected, based on a survey of analysts by Refinitiv:
- Earnings per share: $1.56, meeting estimates
- Revenue: $2.45 billion vs. $2.47 billion expected
In a statement, Darden said it saw seasonal changes that required a return to business. The company’s same-store sales rose 4.2% in the quarter, boosted by the performance of its fine dining restaurants. The segment, which includes The Capital Grille, reported same-store sales growth of 7.6%. But the company’s two largest chains saw weaker demand this quarter.
Olive Garden reported same-store sales growth of 2.3%, below StreetAccount estimates of 5.4%. The chain accounted for 46% of Darden’s revenue in the quarter.
Demand for LongHorn Steakhouse also fell short of Wall Street’s expectations. The chain reported same-store sales growth of 4.2%, missing estimates of 5.1%.
Net income for the period was $193 million, or $1.56 per share, down from $230.9 million, or $1.75 per share, a year earlier.
For its 2023 fiscal year, Darden expects earnings per share from continuing operations of $7.40 to $8. The company assumes that inflation will increase by 6% in the fiscal year. It projects revenue of $10.2 billion to $10.4 billion.
Darden also forecast same-store sales growth of 4% to 6% and the opening of 55 to 60 new restaurants in fiscal 2023.
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