Darden Restaurants Shares Fall After Earnings, ‘Paid In Full By Olive Garden’

Darden Restaurants Shares Fall After Earnings, ‘Paid In Full By Olive Garden’

Written by Sam Bogda

Darden Restaurants (NYSE:) reported first-quarter financial earnings before opening Thursday, sending its stock price down.

Earnings per share were $1.56, in line with analysts’ estimates of $1.56, with revenue coming in at $2.4 billion versus consensus estimates of $2.47 billion.

The company said total sales rose 6.1%, primarily driven by a 4.2% increase in mixed restaurant sales and sales from 34 new restaurants.

β€œWe had a strong quarter and saw a more normal seasonal return to our business, which we didn’t see last year,” said Rick Cardenas, President and CEO of Darden.

Looking ahead, the company expects earnings per share for fiscal year 2023 to be between $7.40 and $8.00, against a consensus of $7.70, on revenue between $10.2 billion and $10.4 billion, versus a consensus of $10.29 billion.

After the earnings announcement, a Cowen analyst said the top streak loss was entirely driven by Olive Garden (LTM 47% of sales) showing greater signs of seasonality versus the 2021 calendar.”

Analyst Quinn added: β€œWe expect OG to be more of a financial story for the second half of 23. Meanwhile, sales in the rest of the portfolio remain encouraging and the Direct Investment Index maintains all aspects of F2023 guidance. We expect margins to improve as inflation eases sequentially through F2023. “. , which has an Outperform rating and a price target of $140 per share.

Elsewhere, Analyst Truist, who has a buy rating and a price target of $136 on Darden, told investors in his note that “DRI reported F1Q23 EPS in line with consensus (missed by our estimate by $0.01) as SSS lost and restaurant margins, offset by lower G&A is expected.”

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“Marketing spending increased slightly, but remains well below pre-COVID levels. The increase raises concerns that the DRI will respond to consumer pressures by increasing marketing and promotions.”

Darden’s shares are down 3.5% at the time of writing.

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