Darden's Q2 Earnings Underperform Estimates, Revenues Top

Core Insights - Darden Restaurants, Inc. (DRI) reported mixed results for the second quarter of fiscal 2025, with earnings per share (EPS) missing estimates while revenues exceeded expectations [1][3][4] Financial Performance - Adjusted EPS for the fiscal second quarter was $2.03, below the Zacks Consensus Estimate of $2.05, compared to $1.84 in the same quarter last year [3] - Total sales reached $2.89 billion, surpassing the consensus mark of $2.87 billion, reflecting a 6% year-over-year increase, supported by a 2.4% increase in same-restaurant sales [4] Segment Performance - Olive Garden sales increased 3.3% year over year to $1.29 billion, with same-restaurant sales up 2% [5] - LongHorn Steakhouse saw a 10.4% year-over-year sales increase to $710.1 million, with same-restaurant sales rising 7.5% [6] - Fine Dining segment sales decreased 3.8% year over year to $306 million, with same-restaurant sales down 5.8% [6] - Other Business segment sales rose 12.9% year over year to $581.4 million, with same-restaurant sales up 0.7% [7] Operating Costs - Total operating costs and expenses increased 6.1% year over year to $2.6 billion, primarily due to higher restaurant expenses, labor costs, and marketing expenses [8] Balance Sheet - As of November 24, 2024, cash and cash equivalents were $217.3 million, up from $194.8 million as of May 26 [9] - Inventories increased to $318 million from $297.7 million in the previous quarter, while long-term debt rose to $2.12 billion from $1.37 billion [9] Share Repurchase - During the fiscal second quarter, Darden repurchased approximately 0.9 million shares for about $142 million, with $601 million remaining under the $1 billion repurchase authorization [10] Fiscal 2025 Outlook - Darden expects total sales of approximately $12.1 billion for fiscal 2025, with same-restaurant sales growth anticipated at 1.5% year over year and diluted EPS projected between $9.40 and $9.60 [12]