Darden Restaurants(US:DRI)2024-06-20 16:49Financial Data and Key Metrics Changes - For fiscal year 2024, total sales grew by 8.6% to $11.4 billion, with adjusted diluted net earnings per share increasing by 11% to $8.88, exceeding initial EPS guidance despite a challenging sales environment [12][25][37] - In Q4, total sales reached $3 billion, a 6.8% increase year-over-year, with same restaurant sales flat, outperforming the industry by 80 basis points [26][28] - Adjusted diluted net earnings per share from continuing operations increased by 2.7% to $2.65, with adjusted EBITDA of $523 million [28][30] Business Line Data and Key Metrics Changes - Olive Garden's total sales increased by 0.7%, but same restaurant sales decreased by 1.5%, while guest counts outperformed the industry by 60 basis points [34] - LongHorn Steak House saw total sales rise by 7.2%, driven by a 4% increase in same restaurant sales, outperforming the industry by 480 basis points [35] - The other business segment, including Ruth's Chris, experienced increased sales but combined negative same restaurant sales of 1.1% [36] Market Data and Key Metrics Changes - Industry same restaurant sales decreased by 0.8% in Q4 and 1.4% for the full fiscal year 2024, with guest counts down 3.5% and 4.7% respectively [8][12] - Darden's same restaurant sales growth of 1.6% for fiscal 2024 outperformed the industry by approximately 300 basis points [37] Company Strategy and Development Direction - The company remains focused on long-term growth and shareholder value, with a strategy that includes disciplined cost management and maintaining competitive advantages [12][19] - Leadership changes have been made to enhance brand development and operational efficiency, including the transition of key executives to new roles [20][22] - The integration of Ruth's Chris Steak House has been completed successfully, achieving expected synergies and contributing to EPS accretion [18][17] Management's Comments on Operating Environment and Future Outlook - Management noted a weaker consumer environment, particularly among lower-income households, impacting transaction volumes [56][60] - There is cautious optimism for gradual improvement in underlying traffic trends throughout fiscal 2025, with guidance for same restaurant sales growth of 1% to 2% [49][50] - The company plans to maintain modest pricing strategies, with expectations of pricing in line with inflation [51][52] Other Important Information - Darden returned $1.1 billion to shareholders in fiscal 2024, including $628 million in dividends and $454 million in share repurchases [37] - The board approved a 7% increase in the quarterly dividend to $1.40 per share, implying an annual dividend of $5.60 [42] Q&A Session Summary Question: Sales outlook for the year and brand performance - Management expects underlying traffic trends to gradually improve, with a blended estimate of 1% to 2% same restaurant sales growth for the full year [49][50] Question: Marketing approach and consumer behavior - The company plans to focus on profitable sales growth rather than deep discounting, maintaining modest pricing strategies [55][60] Question: Olive Garden's traffic and marketing strategies - Olive Garden will continue to emphasize its value proposition and innovate its menu to attract customers, focusing on profitable sales growth [68] Question: Development environment and new builds - The company is optimistic about its new restaurant pipeline, despite higher construction costs and longer timelines [110]