Darden Restaurants disclosed fiscal first-quarter results that fell slightly short of Wall Street projections, prompting an initial sharp decline in share price that moderated following management commentary. The stock dropped as much as 5% in premarket trading before recovering to a loss of approximately 2% during the morning session.
For the quarter ended August 30, the company reported net income of $233.4 million, or $2.04 per share, compared with $257.8 million, or $2.19 per share, in the prior year. Net sales increased 5.1% to $3.20 billion. Same-store sales across the restaurant portfolio grew 3.1%, though executives attributed a 0.8 percentage point headwind to the World Cup tournament’s impact on early-quarter demand.
Olive Garden, Darden’s largest chain by location count and revenue, saw same-store sales increase only 1.1%, reflecting consumer pullback on discretionary spending. The flagship chain also contended with the summer’s cyclospora outbreak concerns, prompting management to postpone a planned marketing campaign centered on unlimited soup, salad, and breadsticks. Leadership indicated the promotion would resume during the current quarter while simultaneously pursuing weekday lunch initiatives focused on value pricing.
Other segments showed stronger performance. LongHorn Steakhouse led the portfolio with 6.2% same-store sales growth, now surpassing Olive Garden as the top performer despite generating smaller overall revenue. The fine-dining segment, including Capital Grille and Ruth’s Chris, posted 1.6% growth, with executives noting that traffic remained below pre-pandemic levels but demonstrated improvement trends. Yard House, included in the “other business” division, achieved 10% same-store sales growth and became Darden’s third billion-dollar brand as of the prior week.
Management maintained its fiscal 2027 guidance, projecting total sales of $13.60 billion to $13.75 billion and net earnings per share from continuing operations between $11.10 and $11.35. Executives expressed optimism about September performance and anticipated improvements in commodity costs, particularly beef, later in the fiscal year.
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