FX.co ★ Darden Restaurants Q3 Adj. EPS Meets Estimates, Sales Miss

Darden Restaurants, Inc. announced that its profits for the third quarter have increased from the previous year, spurred by sales growth across all sections. Despite meeting analysts' expectations for adjusted earnings per share, the company's quarterly sales fell short. Adjusted earnings guidance for the full year of 2024 has increased, but annual sales and same-restaurant sales growth projections have been reduced.

According to President & CEO Rick Cardenas, despite a challenging operating environment, all their segments experienced sales and profit growth. They have also continued to outshine the industry in terms of same-restaurant sales and traffic.

The company's net earnings for the third quarter rose to $312.9 million or $2.60 per share, up from $286.6 million or $2.34 per share in the previous year. Predictably, 24 analysts anticipated the company to report earnings of $2.62 per share for the quarter, excluding special items.

Quarterly total sales increased by 6.8% to $2.97 billion, up from $2.79 billion in the prior year. This growth was induced by the addition of 79 company-owned Ruth's Chris Steak House restaurants and 53 other net new restaurants. The expected revenues for this quarter were projected to be $3.02 billion.

The company's sales at the Olive Garden segment rose to $1.31 billion from $1.30 million, though there was a 1.8% drop in same-restaurant sales. LongHorn Steakhouse segment sales increased to $730.7 million from $695.5 million, accompanied by a 2.3% growth in same-restaurant sales. Fine Dining segment however experienced an increase in sales to $372.9 million from $235.6 million last year, even though same-restaurant sales saw a 2.3% decline.

Darden's Board of Directors announced a regular quarterly cash dividend of $1.31 per share, which is set to be paid on May 1, 2024, to shareholders of record at the close of business on April 10, 2024. The board also authorized a new share repurchase program, allowing the company to repurchase up to $1 billion of its common stock.

As for the fiscal outlook of 2024, Darden expects to adjust net earnings from continued operations in the range of $8.80 to $8.90 per share with total sales approximating to $11.4 billion. They also predict same-restaurant sales growth between 1.5 to 2.0 percent, and plan to open between 50 to 55 new restaurants. The Street currently estimates earnings of $8.86 per share on total sales of $11.51 billion for the year.