Darden Q4 Earnings Surpass Estimates, Revenues Lag

Darden Restaurants, Inc. (DRI - Free Report) reported fourth-quarter fiscal 2019 results, wherein earnings surpassed the Zacks Consensus Estimate, whereas revenues lagged the same.

Adjusted earnings of $1.76 per share beat the Zacks Consensus Estimate of $1.73. Moreover, the bottom line increased 26.6% year over year on higher revenues. Results were aided by the company’s relentless efforts to improve the basic operating factors of the business — food, service, and ambiance.

Total revenues of $2,229.1 million lagged the consensus mark of $2,240 million. However, revenues increased 4.5% from the prior-year quarter. The upside was driven by the addition of 39 net restaurants and a 1.6% increase in blended comps.

Despite earnings beat and growth in revenues, shares of Darden fell 4.9% in pre-market trading. This is because the company’s sales growth across every brand deteriorated sequentially. Also, sales total sales lagged the consensus mark.

Meanwhile, the company’s shares have gained 17.6% so far this year, underperforming the industry’s 21.4% rally.

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 fourth quarter, the company’s legacy brands posted blended comps growth of 1.6%. In the fiscal third quarter, comps increased 2.8%.

Sales at Olive Garden were up 3.7% year over year to $1,107 million. Comps grew 2.4% at the segment, lower than the prior quarter’s comp growth of 4.3%. Traffic declined 0.4%. Pricing improved 1.6% and menu-mix increased 1.2%.

Sales at Fine Dining increased 5% to $154.6 million. Comps at The Capital Grille rose 2.9% compared with growth of 4.3% in third-quarter fiscal 2019. Further, Eddie V's posted comps growth of 2%, lower than 3.7% improvement recorded in the prior quarter.

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