Darden, Parent of Olive Garden and Seasons 52, Same Store Sales Up 4.2%

Scott Peters
22 Sep, 2022
New York City

Darden Restaurants, Inc dropped 4.4% to $125.65 after the parent of Olive Garden reported weaker than expected quarterly results and held out for higher price increases. 

Consolidated same store sales increased 4.2% in its fiscal year 2023 first quarter ending on August 28, compared to 47.5% jump a year ago. 

Revenue in the fiscal year first quarter increased 6.1% to $2.44 billion from $2.31 billion a year ago. 

Net income declined $193 million from $230.9 million a year ago and diluted earnings per share declined to $1.56 from $1.75. 

Same store sales at Olive Garden restaurants increased 2.3%, Longhorn Steakhouse rose 4.2% and the fine dining segment surged 7.6%. 

Darden owns full-restaurants including Olive Garden, LongHorn Steakhouse, Cheddar's Scratch Kitchen, Yard House, The Capital Grille, Seasons 52, Bahama Breeze and Eddie V's.

 

Segment Profit

Segment profit represents sales, less costs for food and beverage, restaurant labor, restaurant expenses and marketing expenses and excludes non-cash real estate related expenses.

Olive Garden restaurants revenue increased to $1.1 billion from $1.09 billion and segment profit declined $216.1 million from $253.3 million a year ago. 

LongHorn Steakhouse revenue increased to $604.6 from $567.1 and segment profit dropped to $92 million from $107.5 million a year ago. 

Fine Dining segment, which includes Seasons 52 and The Capital Grille, revenue jumped to $183.4 million from $168.8 million and segment profit declined to $30 million from $33.5 million a year ago.  

Other businesses, including Cheddar's, Yard House, Bahama Breeze and Yard House, revenue jumped $527.4 million from $479.7 million and segment profit declined to $72.3 million from $84.8 million a year ago. 

 

Dividend Outlook 

The board of directors declared a quarterly cash dividend of $1.21 a share payable on November 1, 2022 to shareholders of record at the close of business on October 10, 2022. 

 

Stock Repurchase 

During the quarter, Darden repurchased approximately 1.7 million shares of its common stock for $199 million compared to $186 million repurchase a year ago. 

As of the end of the fiscal first quarter, the company had approximately $912 million remaining under the current $1 billion repurchase authorization.

 

Reiterated Fiscal 2023 Outlook and Guidance 

The company reiterated its fiscal year 2023 annual sales to fall in range of $10.2 billion and $10.4 billon and consolidated same store sale growth between 4% and 6%. 

The company plans to open between 55 and 60 new restaurants and capital spending between $500 million and $550 million.  

The company said "total inflation" meaning price increase across all brands to average 6% from 4% in the fiscal 2022. 

The restaurant operator estimated net earnings per share from continuing operations between $7.40 and $8.0 on approximately 124 million weighted average diluted shares outstanding.