Darden Restaurants disclosed fiscal first-quarter results for the period ended August 30 that fell slightly short of Wall Street forecasts. 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.
The company’s same-store sales grew 3.1% during the fiscal quarter, with all business units posting gains. However, the World Cup tournament weighed on demand early in the quarter, reducing same-store sales by approximately 80 basis points. Shares initially fell as much as 5% in premarket trading but recovered to finish down about 2% as company executives provided reassuring commentary during the earnings call. CEO Rick Cardenas highlighted that restaurant performance improved in September and projected favorable cost trends for key commodities like beef later in the fiscal year.
Performance varied significantly across Darden’s portfolio. LongHorn Steakhouse emerged as the top performer with same-store sales growth of 6.2%, surpassing Olive Garden as the company’s leading chain despite generating lower overall revenue. Olive Garden, still Darden’s largest chain by location count and sales volume, saw same-store sales increase just 1.1% as consumers became more selective with spending. The chain also faced headwinds from cyclospora outbreak concerns linked to fresh produce, which prompted a shift in its marketing strategy away from its unlimited soup, salad and breadsticks promotion.
The fine-dining segment, comprising establishments like The Capital Grille and Ruth’s Chris, reported same-store sales growth of 1.6%. Traffic to these restaurants remained below pre-pandemic levels, though trends were improving. The “other business” division, which includes Yard House and other concepts, achieved same-store sales growth of 3.8%, with Yard House posting a 10% increase bolstered by World Cup activity. Cardenas noted that Yard House recently achieved billion-dollar brand status and will open 13 new restaurants in fiscal 2027.
Darden reiterated its fiscal 2027 guidance, projecting total sales of $13.60 billion to $13.75 billion and net earnings per share from continuing operations ranging from $11.10 to $11.35.
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