Darden Q3 Earnings Miss Estimates, Same-Store Sales Rise Y/Y

Core Insights - Darden Restaurants, Inc. (DRI) reported third-quarter fiscal 2025 results with earnings and revenues missing the Zacks Consensus Estimate, although both metrics increased year-over-year [1][2] Financial Performance - Adjusted earnings per share (EPS) for the fiscal third quarter were $2.80, slightly below the consensus estimate of $2.81, compared to $2.62 in the prior-year quarter [2] - Total sales for the quarter were $3.15 billion, missing the consensus mark of $3.2 billion, but reflecting a 6.2% increase from the prior-year quarter [3] - Same-restaurant sales increased by 0.7%, supported by contributions from 103 Chuy's restaurants and 40 net new restaurants [3] Segment Sales - Olive Garden sales rose 1.5% year-over-year to $1.33 billion, below the estimate of $1.38 billion, with comparable sales increasing by 0.6% [4] - LongHorn Steakhouse sales increased 5.1% year-over-year to $768.1 million, missing the estimate of $781.6 million, with comparable sales rising by 2.6% [5] - Fine Dining segment sales grew 3.3% year-over-year to $385.3 million, below the estimate of $394.1 million, with comparable sales declining by 0.8% [5] - Other Business sales surged 20.2% year-over-year to $674.3 million, exceeding the estimate of $617.9 million, although comparable sales fell by 0.4% [6] Operating Costs - Total operating costs and expenses increased by 5.9% year-over-year to $2.74 billion, primarily due to higher restaurant expenses, labor costs, and marketing expenses, compared to the projection of $2.77 billion [7] Balance Sheet - As of February 23, 2025, cash and cash equivalents were $224.2 million, up from $194.8 million as of May 26 [8] - Inventories stood at $324.6 million, compared to $318 million in the previous quarter, while long-term debt increased to $2.12 billion from $1.37 billion [8] Share Repurchase - During the fiscal third quarter, Darden repurchased approximately 0.3 million shares of its common stock for about $53 million, with approximately $548 million remaining under the $1 billion repurchase authorization [9] Fiscal 2025 Outlook - For fiscal 2025, Darden expects total sales to be around $12.1 billion, with same-restaurant sales growth anticipated at 1.5% year-over-year [11] - Adjusted diluted EPS from continuing operations is projected to be in the range of $9.45-$9.52, with plans to open 50-55 net new restaurants and total capital spending of approximately $650 million [11]