Darden Restaurants, Inc. (NYSE:DRI) shares tumbled nearly 10% Thursday after the Olive Garden parent posted weaker-than-expected quarterly earnings and revenue, overshadowing double-digit sales growth fueled by acquisitions and steady same-restaurant gains.
The company reported first-quarter adjusted earnings per share of $1.97, missing the analyst consensus estimate of $2.00.
Quarterly sales of $3.004 billion missed the Street view of $3.040 billion.
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Total sales increased 10.4%, driven by a blended same-restaurant sales increase of 4.7% and sales from the acquisition of 103 Chuy’s Tex Mex restaurants and 22 net new restaurants, Darden said in a press release.
Same-restaurant sales at Olive Garden rose 5.9% and LongHorn Steakhouse climbed 5.5%. Fine Dining same-restaurant sales slipped 0.2%, while Other Business grew 3.3%.
Olive Garden sales in the quarter under review were $1.301 billion, higher than $1.209 billion a year ago. Segment profit inched higher to $267.6 million, compared with $250.1 million in the year-ago period.
“We had a strong start to the fiscal year with same-restaurant sales and earnings growth that exceeded our expectations,” said Darden President & CEO Rick Cardenas.
The company exited the quarter with cash and equivalents worth $211 million, with inventories worth $309.6 million.
Darden declared a quarterly cash dividend of $1.50 per share on the company’s outstanding common stock. The dividend is payable on November 3.
During the quarter, the firm repurchased approximately 0.9 million shares of its common stock for a total of $183 million.
As of the end of the first quarter, the company had $865 million remaining under the current $1 billion repurchase authorization.
Outlook
Darden Restaurants reaffirmed fiscal 2026 adjusted EPS guidance at $10.50–$10.70, compared with the $10.68 consensus estimate.
It also raised its fiscal 2026 sales outlook to $12.983 billion–$13.104 billion from $12.922 billion–$13.043 billion, versus the $13.078 billion Street estimate.
Price Action: DRI shares were trading lower by 9.7% to $188.55 at last check Thursday.
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