Olive Garden parent earnings beat estimates, fueled by strong LongHorn Steakhouse sales

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Customers enter an Olive Garden restaurant on Friday, December 9, 2022 in Pittsburgh, California, US.

David Paul Morris | Bloomberg | Getty Images

Darden Restaurant on Thursday informed of Strong sales at Longhorn Steakhouse led to quarterly earnings that topped Wall Street’s expectations.

The company also announced that former CEO Gene Lee plans to step down as chairman of the board. Took retired as chief executive a little over a year ago. He will not stand for re-election at the company’s annual shareholder meeting scheduled for September 20.

“I am proud of what we have accomplished and believe Darden is well-positioned for continued growth and prosperity in the years to come,” Lee said in a statement.

Shares of the company fell 4.5% in premarket trading.

Here’s how the company reported compared to Wall Street’s expectations, based on a poll of analysts by Refinitiv:

  • Earnings per share: $2.58 vs. $2.54 expected
  • Revenue: $2.77 billion, beating expectations

Darden reported net income of $315.1 million, or $2.58 per share, in the fiscal fourth quarter, up from $281.7 million, or $2.24 per share, a year ago.

gross sales grew 6.4% to $2.77 billion.

The company’s same-store sales grew 4%, led by a strong performance from Longhorn Steakhouse. The steakhouse chain reported same-store sales growth of 7.1%, beating StreetAccount’s estimate of 4.9%.

But Olive Garden, which accounts for about 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 for 5% growth.

Darden’s fine-dining segment reported a 1.9% decline in same-store sales. This division includes The Capital Grille and Eddie V.

Next quarter, the company’s fine dining options will also include Ruth’s Chris Steak House, which the company owns. bought for $715 million. Darden’s results for the quarter ended May 28 do not include its latest addition as the company completed the acquisition on June 14.

Looking 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 does not include the approximately 34 cents per share after tax of expenses related to the Ruth’s Chris integration. Its forecast for the remainder of fiscal year 2024 includes operating results from Ruth’s Chris.

The restaurant company is also expecting capital expenditures of $550 million to $600 million and overall inflation of 3% to 4%.