Darden Stock Up on Q4 Earnings Surpass Estimates, Sales Rise Y/Y

Core Insights - Darden Restaurants, Inc. (DRI) reported strong fourth-quarter fiscal 2025 results, with earnings and revenues exceeding expectations, leading to a 4.1% increase in stock price during pre-market trading [1][8] Financial Performance - Adjusted earnings per share (EPS) for Q4 were $2.98, surpassing the Zacks Consensus Estimate of $2.96, and up from $2.65 in the prior-year quarter [2] - Total sales for the quarter reached $3,271.7 million, exceeding the consensus estimate of $3,266 million, and reflecting a 10.6% year-over-year increase, driven by a 4.6% rise in same-restaurant sales [2][8] Segment Performance - Olive Garden's sales increased by 8.1% year-over-year to $1.38 billion, with comparable sales rising 6.9% [3] - LongHorn Steakhouse saw a 9.3% year-over-year sales increase to $833.8 million, with comparable sales up 6.7% [4] - Fine Dining segment sales rose 2.3% year-over-year to $334.6 million, although comparable sales fell 3.3% [4] - Other Business segment sales surged 22.4% year-over-year to $722.3 million, with comparable sales increasing by 1.2% [5] Operating Costs - Total operating costs and expenses for Q4 increased by 12.8% year-over-year to $2.89 billion, primarily due to higher food and beverage expenses, labor costs, and marketing expenses, surpassing projections of $2.82 billion [6] Balance Sheet Highlights - As of May 25, 2025, cash and cash equivalents stood at $240 million, up from $194.8 million a year earlier [7] - Long-term debt increased to $2.13 billion from $1.37 billion year-over-year [9] Share Repurchase Program - Darden repurchased approximately 0.2 million shares worth $51 million during Q4 and authorized a new $1 billion share repurchase program on June 18, 2025, with no expiration date [10] Fiscal 2025 Overview - Total revenues for fiscal 2025 were nearly $12.08 billion, compared to $11.39 billion in fiscal 2024, with operating income rising to $1.36 billion from $1.31 billion [11] - Adjusted EPS for fiscal 2025 was $9.55, up from $8.88 in the previous year [11] Fiscal 2026 Outlook - For fiscal 2026, Darden anticipates total sales growth of 7% to 8%, with same-restaurant sales growth projected between 2% to 3.5% year-over-year [12] - Adjusted diluted EPS is expected to be in the range of $10.50 to $10.70, with plans to open 60-65 net new restaurants and total capital spending projected at $700-$750 million [12]