A customer carries an Olive Garden shopping bag in Pittsburg, California, US, on Friday, Dec. 9, 2022.
David Paul Morris | Bloomberg | Getty Images
Darden Restaurants reported earnings and revenue that exceeded analysts’ expectations in Q1 as the owner of Ruth’s Chris Steak House.
However, the fine-dining segment of Darden’s same-store sales experienced a larger decline than anticipated, suggesting decreased expenditure on upscale restaurant meals by consumers.
In premarket trading, the company’s shares fell over 1%.
Here are the Q1 results compared to the estimates by Wall Street analysts:
- Earnings per share: $1.78 adjusted vs. $1.74 expected
- Revenue: $2.73 billion vs. $2.71 billion expected
In Q1, Darden recorded a net income of $194.5 million, or $1.59 per share, which is an improvement from the previous year’s $193 million, or $1.56 per share.
Excluding the costs associated with the Ruth’s Chris acquisition and integration, the adjusted earnings per share for Darden reached $1.78.
Net sales for the quarter increased by 11.6% to $2.73 billion.
Darden’s same-store sales, excluding Ruth’s Chris, experienced a 5% growth in Q1.
Ruth’s Chris will not be included in Darden’s same-store sales figures until the steakhouse chain has been owned for 16 months. The acquisition of Ruth’s Chris, which cost $715 million, was completed in mid-June.
LongHorn Steakhouse performed exceptionally well in Darden’s portfolio this quarter, witnessing a same-store sales growth of 8.1%, surpassing StreetAccount estimates of 6.1%.
Olive Garden, which contributes approximately 45% of Darden’s revenue, achieved a same-store sales growth of 6.1% in line with expectations.
Darden’s fine-dining restaurants saw a decline of 2.8% in same-store sales, larger than the projected decrease of 1.8%. This segment includes The Capital Grille and Eddie V’s, but Ruth’s Chris has not been factored into the same-store sales metric yet.
Darden reaffirmed its fiscal 2024 outlook, forecasting net sales between $11.5 billion and $11.6 billion, same-store sales growth of 2.5% to 3.5%, and adjusted earnings per share from continuing operations in the range of $8.55 to $8.85.
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