Darden earnings narrowly miss estimates as Olive Garden growth slows

Darden Restaurants reported fiscal first-quarter earnings and revenue that narrowly missed Wall Street expectations, while slower growth at Olive Garden weighed on investor sentiment.

For the quarter ended Aug. 30, Darden posted earnings from continuing operations of $2.05 per share on revenue of $3.20 billion, compared with analyst estimates of $2.06 per share and $3.21 billion, according to CNBC, citing LSEG. Net income declined to $233.4 million, or $2.04 per share, from $257.8 million, or $2.19 per share, a year earlier. Net sales rose 5.1%.

Same-store sales increased 3.1% across Darden, with every business unit reporting growth. LongHorn Steakhouse led the portfolio with a 6.2% increase, while Olive Garden’s same-store sales rose 1.1% and the company’s fine-dining segment gained 1.6%.

Executives said the World Cup reduced quarterly same-store sales growth by 0.8 percentage points. Olive Garden also changed its planned marketing after consumer concern about lettuce linked to cyclospora outbreaks, postponing a campaign for unlimited soup, salad and breadsticks until the current quarter. The chain is also developing value-focused efforts to increase weekday lunch traffic.

Darden shares fell as much as 5% in premarket trading before paring losses to about 2% in morning trading. CEO Rick Cardenas said the company’s chains were performing better in September and that costs for commodities including beef were expected to improve later in the fiscal year.