Darden Meets Q1 Earnings Estimates, Raises EPS View

Darden Restaurants, Inc. (DRI - Free Report) reported mixed results in the second quarter of fiscal 2019, wherein earnings met estimates while revenues lagged the same.

Adjusted earnings of 92 cents per share were in line with the Zacks Consensus Estimate. The bottom line increased 26% year over year on the back of higher revenues. Results were aided by the company’s relentless efforts in improving the basic operating factors of the business — food, service, and atmosphere.

Total revenues of $1.973.4 million lagged the consensus mark by 0.4%. However, revenues increased 4.9% from the prior-year quarter. The upside was driven by sales growth across most of the brands.

Following the quarterly results, shares of Darden barely moved in the pre-market trading. In a year’s time, however, the stock has gained 2.2%, slightly underperforming its industry’s 5.4% growth.

Revenues by Segments

Darden reports business under four segments — Olive Garden, LongHorn Steakhouse, Fine Dining that includes The Capital Grille and Eddie V's, and Other Business.

In the fiscal second quarter, the company’s legacy brands posted blended comps growth of 2.1%. In the fiscal first quarter, comps increased 3.3%.

Sales at Olive Garden were up 4.9% year over year to $998.1 million. Comps grew 3.5% at the segment, higher than the prior quarter’s comp growth of 5.3%. Traffic fell 0.8% despite 1.9% improvement in pricing and 2.4% growth in menu mix.

Sales at Fine Dining increased 4.3% to $146.7 million. Comps at The Capital Grille rose 3.7% compared with 3.9% reported in first-quarter fiscal 2019. Eddie V's also posted comps growth of 0.9%, lower than 3% improvement recorded in the last reported quarter.

Revenues from Other Business jumped 3.6% year over year to $416 million. However, comps at Seasons 52 fell 0.8% in the reported quarter compared with comps decline of 1.9% in first-quarter fiscal 2019. Comps at Yard House edged down1.1% against 0.6% increase in the last reported quarter. Meanwhile, comps slipped 1.1% at Bahama Breeze, flat quarter over quarter.

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