Darden Restaurants recently reported their quarterly results, and it was a mixed bag. The company faced challenges as Olive Garden, one of their key chains, experienced a decrease in same-store sales for the second quarter in a row. This decline impacted the overall performance of the company, despite some positive growth.
Financial Overview
In the fourth quarter of fiscal 2025, Darden reported a net income of $308.1 million, or $2.57 per share. This was a decrease from the previous year’s earnings of $315.1 million, or $2.58 per share. The company did manage to exceed Wall Street’s expectations in terms of earnings per share, reporting $2.65 adjusted compared to the expected $2.61. However, revenue fell slightly short of expectations, coming in at $2.96 billion versus the expected $2.97 billion.
Darden’s acquisition of Ruth’s Chris Steak House and other new locations helped drive a 6.8% increase in net sales. However, same-store sales across the company remained flat, with Olive Garden experiencing a 1.5% decline. This disappointing performance was further compounded by a 2.6% decrease in same-store sales at the fine-dining restaurants, which include The Capital Grille and Eddie V’s.
Despite the challenges faced by Olive Garden and the fine-dining segment, LongHorn Steakhouse emerged as a bright spot for Darden. The chain reported a 4% increase in same-store sales, positioning itself as a standout performer within Darden’s portfolio. This growth is a positive sign for the company as it works towards improving its overall performance.
Looking ahead to fiscal 2025, Darden forecasts earnings per share of $9.40 to $9.60, aligning with Wall Street’s expectations. The company anticipates net sales of $11.8 billion to $11.9 billion, slightly below analysts’ estimates. Darden also projects a 3% inflation rate and same-store sales growth of 1% to 2%. However, it is important to note that the results from Ruth’s Chris Steak House will not be included in same-store sales until the second quarter of the fiscal year.
Darden Restaurants faces challenges in maintaining consistent growth, particularly with underperforming chains like Olive Garden. The company’s ability to drive sales and improve performance across all segments will be crucial for its long-term success. By focusing on strategic initiatives and leveraging standout performers like LongHorn Steakhouse, Darden can overcome these obstacles and position itself for sustained growth in the future.