Obesity Drugs Like GLP-1 Are Impacting Alcohol Consumption, Darden Flags - Darden Restaurants (NYSE:DRI)

Core Viewpoint - Darden Restaurants, Inc. reported solid second-quarter sales growth and reaffirmed its full-year earnings guidance, despite a slight miss in adjusted earnings per share compared to analyst expectations [1][9]. Financial Performance - The company achieved quarterly sales of $3.102 billion, reflecting a year-over-year increase of 7.3%, surpassing the analyst consensus of $3.071 billion [2]. - Adjusted earnings per share for the second quarter were reported at $2.08, slightly below the consensus estimate of $2.10 [1]. Sales Growth Drivers - Sales growth was attributed to a blended same-restaurant sales increase of 4.3% and contributions from 30 net new restaurants [3]. - Key brands driving same-restaurant sales included Olive Garden with a 4.7% increase, LongHorn Steakhouse with a 5.9% increase, and Fine Dining with a 0.8% increase [3]. Dividend and Share Repurchase - The board declared a quarterly cash dividend of $1.50 per share, payable on February 2, 2026, to shareholders of record as of January 9, 2026 [5]. - The company repurchased approximately 1.1 million shares for $222 million, with $643 million remaining under its $1 billion share repurchase authorization [5]. Earnings Call Insights - Management noted record Thanksgiving reservations and strong holiday bookings, with improving pricing trends allowing for some pricing coverage in the latter half of the fiscal year [6]. - The company is monitoring the impact of GLP-1 usage on consumer behavior, particularly regarding alcohol consumption, and is adapting its menu to include lighter-portion options [7]. Cost and Outlook - Beef costs are expected to remain high into the third quarter, with some relief anticipated in the fourth quarter [8]. - Darden expects fiscal third-quarter earnings per share to grow in the mid-single-digit range compared to the previous year [8]. - The company reaffirmed its fiscal 2026 adjusted EPS outlook of $10.50 to $10.70, with total sales growth projected at 8.5% to 9.3% [9][10].