Darden Restaurants on Thursday reported quarterly earnings that topped Wall Street’s expectations, fueled by strong LongHorn Steakhouse sales.
The company also announced that former CEO Gene Lee plans to step down as chair of the board. Lee retired a little over a year ago as chief executive. He won’t stand for reelection at the company’s annual shareholders meeting, which is scheduled for Sept. 20.
“I am proud of what we have accomplished and believe that Darden is well-positioned to continue to grow and prosper for years to come,” Lee said in a statement.
Shares of the company fell 4.5% in premarket trading.
Here’s what the company reported compared with what Wall Street was expecting, based on a survey of analysts by Refinitiv:
- Earnings per share: $2.58 vs. $2.54 expected
- Revenue: $2.77 billion, meeting expectations
Darden reported fiscal fourth-quarter net income of $315.1 million, or $2.58 per share, up from $281.7 million, or $2.24 per share, a year earlier.
Net sales rose 6.4% to $2.77 billion.
The company’s same-store sales increased 4%, led by strong performance by LongHorn Steakhouse. The steakhouse chain reported same-store sales growth of 7.1%, topping StreetAccount estimates of 4.9%.
But Olive Garden, which accounts for roughly 45% of Darden’s sales, reported weaker-than-expected performance for the quarter. The Italian chain’s same-store sales rose 4.4%, falling short of expectations of 5% growth.
Darden’s fine-dining segment reported same-store sales declines of 1.9%. The division includes The Capital Grille and Eddie V’s.
Next quarter, the company’s fine dining options will also include Ruth’s Chris Steak House, which the company bought for $715 million. Darden’s results for this quarter, which ended May 28, do not include its latest addition because the company completed the acquisition June 14.
Looking forward to fiscal 2024, Darden is forecasting net sales of $11.5 billion to $11.6 billion, same-store sales growth of 2.5% to 3.5% and adjusted earnings per share from continuing operations of $8.55 to $8.85.
Its earnings outlook excludes about 34 cents per share, after tax, of expenses related to the Ruth’s Chris integration. The rest of its fiscal 2024 forecast includes Ruth’s Chris’s operating results.
The restaurant company is also anticipating capital spending of $550 million to $600 million and total inflation of 3% to 4%.