Darden's Earnings and Revenues Underperform Estimates in Q1

Core Insights - Darden Restaurants, Inc. reported disappointing first-quarter fiscal 2025 results, with earnings and revenues falling short of expectations despite a year-over-year increase in sales [1][2] Earnings & Revenues - Adjusted earnings per share (EPS) for the quarter were $1.75, missing the Zacks Consensus Estimate of $1.81, and down from $1.78 in the prior-year quarter [3] - Total sales for the quarter were $2.76 billion, below the consensus mark of $2.80 billion, but up 1% from the previous year, supported by 42 net new restaurants, despite a same-restaurant sales decline of 1.1% [4] Sales by Segments - Olive Garden's sales decreased by 1.5% year over year to $1.21 billion, missing estimates of $1.26 billion, with comparable sales down 2.9% [5] - LongHorn Steakhouse saw a 9.2% year-over-year sales increase to $731.5 million, exceeding estimates of $694.3 million, with comparable sales rising 3.7% [6] - Fine Dining segment sales increased by 2% year over year to $278.9 million, below estimates of $290.1 million, with comparable sales down 6.0% [6] - Other Business sales declined by 0.7% year over year to $555.5 million, missing estimates of $571.3 million, with comparable sales dropping 1.8% [7] Operating Highlights - Total operating costs and expenses rose by 0.4% year over year to $2.49 billion, primarily due to increased restaurant expenses, labor costs, and marketing expenses, compared to a projection of $2.52 billion [8] Balance Sheet - As of August 25, 2024, cash and cash equivalents were $192.5 million, down from $194.8 million as of May 26, while inventories increased to $297.7 million from $290.5 million [9] - Long-term debt stood at $1.39 billion, up from $1.37 billion as of May 26 [9] Share Repurchase - During the fiscal first quarter, the board repurchased approximately 1.2 million shares for about $172 million, with $743 million remaining under the $1 billion repurchase authorization [10] Fiscal 2025 Outlook - The company maintains its fiscal 2025 sales guidance in the range of $11.8-$11.9 billion, with same-restaurant sales growth expected to be 1-2% year over year and diluted EPS anticipated between $9.40-$9.60 [11]