Darden Restaurants Falls As Tough Macro Hurts Profits
Darden Restaurants (DRI:US) shares dropped on Thursday after the restaurant chain offered a weaker-than-expected profit outlook for its fiscal year.
Quarterly revenue rose 6.4% year-over-year to $2.77 billion, in-line with analyst targets. Operating income jumped 11% to $374.5 million, just ahead of the consensus at $373.2 million. Same-store sales in the quarter increased 4%, coming in below the 4.2% expected.
Darden’s top brand Olive Garden missed analyst expectations while steakhouse LongHorn saw its sales rise 7.1%, below the 4.5% expected from analysts. Olive Garden recently acquired Ruth’s Chris Steakhouse.
"We had a solid quarter to conclude a strong year in which we met or exceeded our financial outlook, despite a tough operating environment," said Darden President & CEO Rick Cardenas.
Similarly, CFO Raj Vennam noted “difficult inflationary environment.”
Shares were mostly hit by forward-looking guidance that calls for a full-year profit of $8.70 on revenue of $11.55 billion. Analyst consensus stood at $8.81 for EPS on sales of $11.14 billion.
Speaking on the earnings call with analysts, the company’s management said labor inflation ticked down YoY but beef prices continue to increase
Vennam said Darden continues to expect that hourly wage inflation rises "in mid single digits and salary inflation to be close to that."
"Some of that is a function of how we choose to pay people," he said.
Representatives Kathy Manning and Ro Khanna traded Darden shares last year.
