An Olive Garden restaurant in Silverdale. Darden Restaurants, Inc. which owns Olive Garden and other restaurant chains is scheduled to report its fourth-quarter 2022 earnings on June 23.
Toby Scott | Lightrocket | Getty Images
Darden Restaurants‘ quarterly earnings and revenue beat analysts’ expectations, shaking off inflationary pressures as diners returned to LongHorn Steakhouse and The Capital Grille.
In the face of higher costs and economic uncertainty, Olive Garden’s parent company issued a mixed forecast for fiscal 2023.
Shares of the company were up 5% in premarket trading on Thursday.
Here’s what the company reported compared with what Wall Street was expecting, based on a survey of analysts by Refinitiv:
- Earnings per share: $2.24 vs. $2.21 expected
- Revenue: $2.6 billion vs. $2.54 billion expected
Darden reported fiscal fourth-quarter net income of $281.7 million, or $2.24 per share, down from $368.5 million, or $2.78 per share, a year earlier. Analysts surveyed by Refinitiv were expecting earnings per share of $2.21.
Net sales rose 14.2% to $2.6 billion, topping expectations for $2.54 billion. Across the company’s chains, same-store sales climbed 11.7%, fueled by the rebound of its fine-dining business.
Its fine-dining restaurants, which include The Capital Grille and Eddie V’s, reported same-store sales growth of 34.5%. The segment was hardest hit by the pandemic but its sales surpassed 2019 levels in the fiscal fourth quarter.
Olive Garden, which accounts for nearly half of Darden’s revenue, saw its same-store sales rise just 6.5% in the quarter. Wall Street was expecting same-store sales growth of 7.2% for the Italian-inspired chain, according to StreetAccount estimates.
Strong demand for LongHorn Steakhouse helped make up the difference. The steak restaurant chain reported same-store sales growth of 10.6%, beating analysts’ estimates of 5.6%.
For its fiscal 2023, Darden is expecting earnings per share from continuing operations of $7.40 to $8, falling short of analysts’ expectations of $8.11. The company is assuming that inflation will rise 6% in the new fiscal year. Its revenue outlook of $10.2 billion to $10.4 billion is in line with Wall Street’s estimates for $10.22 billion.
Darden is also expecting same-store sales growth of 4% to 6% and 50 to 60 new restaurant openings in fiscal 2023.
The company’s board authorized a new $1 billion share buyback program. It does not have an expiration date.