Olive Garden and LongHorn parent Darden beats profit estimates but falls short on revenue

By Steve Gelsi

Chief Executive Rick Cardenas says company is growing market share

Darden Restaurants Inc.'s stock dropped 1% on Friday after the parent of Olive Garden and LongHorn Steakhouse restaurants fell slightly short of second-quarter revenue estimates while reporting a rise in profits.

The Orlando, Fla.-based restaurant operator also said its estimated 2024 same-stores sales growth of 2.5% to 3% would miss the FactSet consensus estimate for 3.1% growth.

Darden (DRI) said its second-quarter profit rose to $212.1 million, or $1.76 a share, from $187.2 million, or $1.52 a share, in the year-ago period. Darden's adjusted second-quarter earnings totaled $1.84 a share.

Darden beat the FactSet second-quarter consensus estimate of $1.74 a share.

Second-quarter sales rose by 9.7% to just under $2.73 billion, just short of the analyst estimate of $2.74 billion.

Chief Executive Rick Cardenas said the company continued to grow market share as it outperformed the industry on same-restaurant sales and traffic.

"The consumer still continues to appear both resilient, but a little bit more selective ... and we've seen that for a couple of quarters," Cardenas said, according to a transcript of the company's quarterly call with analysts.

Looking ahead, Darden said it expects full-year 2024 adjusted earnings of $8.75 to $8.90 a share, compared with the FactSet consensus estimate of $8.82 a share.

Darden is projecting 2024 sales of approximately $11.5 billion, compared with the analyst estimate of $11.6 billion.

Darden's chief financial officer, Rajesh Vennam, said the restaurant chain has been seeing "some softness" in checks paid by customers by about 50 basis points, but lower inflation is providing a boost of about 25 basis points.

The company is bullish on its prospects for the last two weeks of the year.

"We're encouraged by the strong holiday bookings we're seeing at our reservation brands," Vennam said.

-Steve Gelsi

This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal.

(END) Dow Jones Newswires

12-15-23 1244ET

Copyright (c) 2023 Dow Jones & Company, Inc.