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Olive Garden Parent Darden Climbs on Third-Quarter Earnings Beat

Darden says 99% of the company's are open with at least limited dining room capacity.
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Darden Restaurants  (DRI) - Get Darden Restaurants, Inc. Report, parent company of Olive Garden, LongHorn Steakhouse and other brands, served up third-quarter earnings Thursday that beat Wall Street's expectations.

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Shares of the Orlando, Fla. company were climbing 4.46% to $139.90 in premarket trading.

Darden reported net income of $128.7 million, or 98 cents a share, down from $232.3 million, or $1.89, a year ago but ahead of Wall Street estimates of 70 cents a share.

Sales totaled $1.73 billion, down 26.1% a year ago. Analysts called for sales of $1.63 billion. Same-restaurant sales fell 26.7%.

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Same-restaurant sales for Olive Garden fell 25.8%, while Longhorn Steakhouse declined 12.6%. Darden's fine dining business, which includes the Capital Grille, Prime Seafood, and Eddie V's was down 45.2%. 

The restaurant industry was hit hard by the coronavirus pandemic as it forced to either close their facilities or severely limit service. 

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Darden said 99% of the company's were open with at least limited dining room capacity.

Darden's board declared a quarterly dividend of 88 cents a share, payable on May 3, to shareholders of record as of April 9.

The board also authorized a new share repurchase program in which the company may repurchase up to $500 million of its outstanding common stock.

Looking ahead, Darden said it expects fourth-quarter sales of $2.1 billion and net earnings per share to range from $1.60 to $1.70.

Analysts expect sales of $1.94 billion and earnings of $1.25 a share.

"It is hard to believe that it has been a year since the pandemic began to significantly impact our business," Chairman and CEO Gene Lee said in a statement.

Lee said the company was investing about $17 million to provide a one-time bonus for hourly restaurant workers. 

Since March 2020, Lee said, Darden has invested $200 million in such programs as paid sick leave, emergency pay, and paid time off to receive the COVID-19 vaccine.

The company will also raise the minimum wage for workers to $10 per hour, including tips, starting Monday. The amount will increase to $11 in January 2022, and $12 in January 2023.