Darden Restaurants, Inc. (NYSE:DRI) Misses Topline Expectations

Darden Restaurants, Inc. (NYSE:DRI) stock fell 2.62% (As on September 23, 11:38:12 AM UTC-4, Source: Google Finance) after the company reported mixed quarterly results but stood by its outlook for fiscal 2023, predicting inflation will cool in coming quarters. Darden has tried to draw customers by pricing below its rivals and limiting how much of its rising costs it passes on to diners. Demand for the company’s two largest chains fell short of expectations during the period. Olive Garden’s same-store sales rose 2.3%, falling short of StreetAccount estimates of 5.4%. Demand for LongHorn Steakhouse also was short of Wall Street’s expectations. The chain reported same-store sales growth of 4.2%, missing estimates of 5.1%. Overall, the company’s same-store sales rose 4.2%, boosted by the performance of its fine-dining restaurants. The segment, which includes The Capital Grille, reported same-store sales growth of 7.6%. Darden said it saw seasonal changes to demand return to the business. Net income for the period was $193 million for the quarter, down from $230.9 million, a year earlier.

DRI in the first quarter of FY 23 has reported the adjusted earnings per share of $1.56, which is inline with the analysts’ estimates for the adjusted earnings per share of $1.56, based on a survey of analysts by Refinitiv. The company had reported the adjusted revenue growth of 6.1 percent to $2.45 billion in the first quarter of FY 23, misses the analysts’ estimates for revenue of $2.47 billion.

During the quarter, the Company repurchased approximately 1.7 million shares of its common stock for a total cost of approximately $199 million.  As of the end of the fiscal first quarter, the Company had approximately $912 million remaining under the current $1 billion repurchase authorization.

For its fiscal 2023, Darden expects earnings per share from continuing operations to be in the range of $7.40 to $8. The company is assuming that inflation will rise 6% in the fiscal year. The company believes inflation peaked in the first quarter and the gap between higher costs and menu prices will narrow in the next two quarters. If inflation exceeds expectations, Darden plans to hike prices further. Darden is also projecting revenue of $10.2 billion to $10.4 billion. It’s forecasting same-store sales growth of 4% to 6% and 55 to 60 new restaurant openings in fiscal 2023. For its fiscal 2023, Darden expects total capital spending of $500 to $550 million

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