Darden's Q3 sales disappoint; Olive Garden struggles

Darden Restaurants reported lower-than-expected sales in its latest quarter, primarily due to poor performance from Olive Garden and LongHorn Steakhouse. The company announced its results on Thursday, noting that weather conditions affected sales. In morning trading, Darden's shares increased by 6%. The earnings per share were $2.80, slightly beating analysts' expectations of $2.79. However, revenue was $3.16 billion, below the anticipated $3.21 billion. Darden's net income for the third quarter was $323.4 million, up from $312.9 million a year earlier. The company's same-store sales only grew by 0.7%, missing the expected 1.7% increase. Executives attributed the slowdown to winter weather, but noted that sales were solid without those conditions. CEO Rick Cardenas stated that despite consumers feeling less optimistic, there was not a strong link between that sentiment and dining out. He expressed confidence that as long as incomes rise faster than inflation, spending would likely continue. Both Olive Garden and LongHorn Steakhouse saw disappointing same-store sales growth. Olive Garden rose 0.6%, missing the 1.5% target, while LongHorn increased 2.6%, short of the 5% expectation. In February, Olive Garden expanded its delivery service with Uber Direct, which has been performing well. The chain saw a consistent increase in delivery orders over the weeks. On the other hand, Darden's fine dining segment, which includes The Capital Grille and Ruth's Chris Steak House, experienced same-store sales declines of 0.8%. The casual dining segment, including Cheddar's Scratch Kitchen and Yard House, also reported a 0.4% drop. Looking ahead, Darden maintained its revenue forecast for the year at $12.1 billion and narrowed its earnings outlook to between $9.45 and $9.52 per share. Results from Chuy's will not be included in same-store sales until next year.