Darden Restaurants stock surges 11% following Q1 earnings

(Updated - September 19, 2024 7:31 AM EDT)

Darden Restaurants, Inc. (NYSE:DRI ) reported first-quarter fiscal 2025 results that missed analyst expectations but saw its stock jump more than 11% as the company maintained its full-year outlook and noted improving sales trends.

The parent company of Olive Garden and LongHorn Steakhouse posted adjusted earnings per share of $1.75, below the consensus estimate of $1.84. Revenue came in at $2.8 billion, slightly under the $2.81 billion analysts expected but up 1% YoY.

Darden's total sales growth was driven by 42 net new restaurant openings, which offset a 1.1% decline in blended same-restaurant sales. LongHorn Steakhouse was a bright spot with 3.7% same-restaurant sales growth, while Olive Garden saw a 2.9% drop.

"While we fell short of our expectations for the first quarter, I firmly believe in the strength of our business," said Darden President & CEO Rick Cardenas. He noted that sales trends have improved since July's "significant step down in traffic."

The company reiterated its fiscal 2025 outlook, projecting earnings per share of $9.40 to $9.60. This guidance excludes impacts from the pending Chuy's acquisition.

"The significant step down in traffic during July, led to our first quarter earnings being lower than expected," said Darden CFO Raj Vennam. "Following the softness in July, our sales trend has continued to improve. Considering this recovery as well as the planned initiatives to support the remainder of the fiscal year, we are reiterating our guidance for fiscal 2025."

Darden repurchased $172 million of stock during the quarter and declared a quarterly dividend of $1.40 per share.

Source: Investing.com