25.1 C
New York

Darden Restaurants (DRI) Q1 2023 earnings


An order of breadsticks from a Darden Restaurants Inc. Olive Garden

Getty Images

Darden Restaurants on Thursday reported mixed quarterly results but stood by its outlook for fiscal 2023, predicting inflation will cool in coming quarters.

The parent company of Olive Garden and LongHorn Steakhouse said net sales for the fiscal first quarter rose 6.1% to $2.45 billion, which was wanting Wall Street’s expectations. Darden has tried to attract customers by pricing below its rivals and limiting how much of its rising costs it passes on to diners. Within the quarter, its menu prices were up 6.5%, trailing total inflation of 9.5%.

related investing news

CNBC ProThere’s one number that could possibly be key to how markets trade right after the Fed meets

Still, CEO Rick Cardenas said on the corporate’s conference call that inflation is weighing on consumers, particularly those in households with annual incomes under $50,000.

Options Action: A bet against Darden

“We’re seeing a bit little bit of change in behavior from that consumer, but not huge,” he said.

Inflation can also be weighing on the corporate’s operating profit. Through the quarter, Darden’s costs for food, beverages and labor climbed compared with the year-ago period.

Shares of the corporate fell greater than 4% in morning trading.

Here’s what Darden reported for the quarter ended Aug. 28 compared with what Wall Street was expecting, based on a survey of analysts by Refinitiv:

  • Earnings per share: $1.56, meeting estimates
  • Revenue: $2.45 billion vs. $2.47 billion expected

Demand for the corporate’s two largest chains fell wanting expectations through the period. Olive Garden’s same-store sales rose 2.3%, falling wanting StreetAccount estimates of 5.4%. Cardenas said the chain, which accounted for nearly half of Darden’s revenue through the quarter, is more exposed to low-income consumers.

Demand for LongHorn Steakhouse also was wanting Wall Street’s expectations. The chain reported same-store sales growth of 4.2%, missing estimates of 5.1%.

Overall, the corporate’s same-store sales rose 4.2%, boosted by the performance of its fine-dining restaurants. The segment, which incorporates The Capital Grille, reported same-store sales growth of seven.6%. Darden said it saw seasonal changes to demand return to the business. Before the Covid pandemic, the summer months typically meant a lull in traffic.

Net income for the period was $193 million, or $1.56 per share, down from $230.9 million, or $1.75 per share, a 12 months earlier.

For its fiscal 2023, Darden expects earnings per share from continuing operations of $7.40 to $8. The corporate is assuming that inflation will rise 6% within the fiscal 12 months. CFO Raj Vennam told investors that the corporate believes inflation peaked in the primary quarter and the gap between higher costs and menu prices will narrow in the subsequent two quarters. If inflation exceeds expectations, Darden plans to hike prices further.

Darden can also be projecting revenue of $10.2 billion to $10.4 billion. It’s forecasting same-store sales growth of 4% to six% and 55 to 60 latest restaurant openings in fiscal 2023.

Get the latest Sports Updates (Soccer, NBA, NFL, Hockey, Racing, etc.) and Breaking News From the United States, United Kingdom, and all around the world.

Related articles


Recent articles