Darden Restaurants lifts sales forecast, beats quarterly estimates on casual dining demand
Darden Restaurants forecast annual same-store sales above estimates after strong quarterly results on Friday, banking on demand driven by food delivery and advertising efforts at its casual dining chains such as Olive Garden.
Shares of the company rose about three per cent in premarket trading after the company also announced a new US$1 billion share repurchase program.
Casual dining and fast casual restaurant chains, including Olive Garden and Shake Shack, have benefited from menu innovations and promotions to entice customers, offsetting the impact of consumers turning to home-cooked meals to save money.
Meanwhile, fast food chains including burger giant McDonald's, Starbucks and Domino's Pizza have been struggling with tepid demand.
Darden expects annual same-store sales to grow in the range of two per cent to 3.5 per cent, midpoint of which is above analysts' estimates of 2.64 per cent, as per data compiled by LSEG.
Initiatives such as home deliveries with the help of Uber Direct and 'buy one, take one' offerings at Olive Garden have further helped the restaurant chain operator.
Its consolidated same-store sales were up 4.6 per cent in the quarter compared to a year ago, with Olive Garden sales rising 6.9 per cent.
The company posted fourth-quarter sales of $3.27 billion, edging past estimates of $3.26 billion.
It logged adjusted profit of $2.98 per share for the quarter ended May 25, above estimates of $2.97 per share, owing to moderate price hikes and lower input costs.
However, the company forecast annual earnings per share between $10.50 and $10.70, compared with estimates of $10.75 per share.
(Reporting by Anuja Bharat Mistry in Bengaluru; Editing by Vijay Kishore)
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