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Darden Serves Up Earnings Beat but Posts Disappointing Sales

Olive Garden, Darden's largest restaurant chain, reports disappointing sales.
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Darden Restaurants  (DRI) - Get Darden Restaurants, Inc. Report beat Wall Street's second-quarter earnings expectations but the owner of Olive Garden reported disappointing sales and guidance.

Shares of the Orlando, Fla.-based company were down 2.36% to $116 in premarket trading.

Darden reported net earnings of $96 million, or 73 cents a share, up from $24.7 million, or 20 cents a share, in the year-ago period.  The FactSet consensus called for earnings of 71 cents a share.

Sales totaled $1.66 billion, down 19.4% from a year ago and missed Wall Street's call for $1.69 billion. 

Olive Garden, Darden's largest restaurant chain, reported sales of $829.5 million, down 19%, short of the FactSet consensus of $855.4 million. Same-store sales dropped  19.9%, wider than analysts' forecasts for a 17.4% decline. 

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Same-store sales for Darden's fine dining restaurants fell 31% and declined 11.1% for LongHorn Steakhouse. 

Looking ahead, Darden said it expects earnings of 50 cents to 75 cents a share, compared with the FactSet consensus of $1.34, and projects total sales to fall 65% to 70% from last year.

Restaurants have suffered during the coronavirus pandemic as many were forced to shut down or reduce seating capacity in an effort to stop the spread of the disease.

"We continue to view this environment as a rare opportunity to meaningfully transform our business for long-term growth," CEO Gene Lee said a statement. "Our brands made additional strides to invest in and strengthen their businesses to ensure they emerge even stronger and better positioned to grow share."

Separately, Darden's board named Lee as chairman, succeeding Charles Sonsteby, effective Jan. 4. Sonsteby will become the board's lead independent director.

Ricardo Cardenas, who had been chief financial officer since 2016, has been named president and chief operating officer. Rajesh Vennam was named chief financial chief.