Olive Garden’s parent company Darden beats profit estimates as sales surge

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An Olive Garden restaurant in Silverdale. Darden Restaurants, Inc., owner of Olive Garden and other restaurant chains, is expected to report fourth quarter 2022 results on June 23.

Toby Scott | Light flare | Getty Images

Darden Restaurants’ quarterly earnings and revenue beat analysts’ expectations, shaking off inflationary pressures as diners returned to the LongHorn Steakhouse and Capital Grille.

Faced with higher costs and economic uncertainty, Olive Garden’s parent company released a mixed forecast for fiscal 2023.

Shares of the company rose 5% in premarket trading on Thursday.

Here’s what the company reported compared to what Wall Street expected, based on a Refinitiv analyst survey:

  • Earnings per share: $2.24 vs. $2.21 expected
  • Revenue: $2.6 billion vs. $2.54 billion expected
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Darden reported fiscal fourth-quarter net income of $281.7 million, or $2.24 per share, compared with $368.5 million, or $2.78 per share, a year earlier. Analysts polled by Refinitiv had expected earnings per share of $2.21.

Net sales rose 14.2% to $2.6 billion, beating expectations of $2.54 billion. Across the company’s chains, same-store sales rose 11.7%, fueled by the rebound in its dining business.

Its fine dining restaurants, which include The Capital Grille and Eddie V’s, reported comparable store sales growth of 34.5%. The segment was the hardest hit by the pandemic, but its sales exceeded 2019 levels in the fourth fiscal quarter.

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Olive Garden, which accounts for nearly half of Darden’s revenue, saw same-store sales rise just 6.5% in the quarter. Wall Street expected 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 posted same-store sales growth of 10.6%, beating analysts’ estimates of 5.6%.

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For its fiscal 2023, Darden expects earnings per share from continuing operations of $7.40 to $8, below analysts’ expectations of $8.11. The company assumes that inflation will rise by 6% in the new fiscal year. Its revenue outlook of $10.2 billion to $10.4 billion is in line with Wall Street estimates of $10.22 billion.

Darden also expects same-store sales growth of 4% to 6% and 50 to 60 new restaurants to open in fiscal 2023.

The company’s board has authorized a new $1 billion share buyback program. It has no expiration date.

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