Darden Tops Bottom-Line Estimates but Same-Store Sales Are Light

Shares fall despite Darden Restaurants reporting quarterly earnings that topped Wall Street estimates.
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Darden Restaurants (DRI) - Get Report was struggling Thursday after the parent of Olive Garden reported second-quarter same-store sales that missed analysts' estimates even as earnings beat forecasts.

The company reported net income of $24.7 million, or 20 cents a share, down from  $115.6 million, or 92 cents, a year earlier. Adjusted earnings of $1.12 a share beat analysts' estimates of $1.07. Revenue of $2.06 billion rose from $1.97 billion and matched estimates.

However, the bad news for the company was that same-store sales rose 2%, slightly below consensus estimates of 2.1% growth. For fiscal 2020, the company expects same-store sales growth between 1% and 2%, in line with analysts' estimates of 1.6%.

“We had a good quarter with continued same-restaurant sales growth outpacing the casual dining industry benchmarks, especially at LongHorn," said CEO Gene Lee. "We continue to see that consumers are willing to visit brands with compelling value and strong guest experiences."

Olive Garden saw a 2% increase in same-store sales, while Longhorn Steakhouse comps rose 6.7%. The company's Seasons 52 restaurant chain reported a 3.5% decrease in same-store sales.

Darden expects fiscal 2020 sales growth between 5.3% and 6.3% with 50 gross and 44 net new restaurant openings.

Darden shares have risen more than 16% year to date, but the stock was falling 4.1% to $111.56 in  trading Thursday. 

Separately, the company declared a quarterly cash dividend of 88 cents a share, payable Feb. 3, to shareholders of record on Jan. 10.