Customers arrive at the Olive Garden site in San Antonio, Texas.
Callahan O’Hare | Bloomberg | Getty Images
Darden Restaurants reported quarterly revenue on Friday that fell short of analyst expectations as another wave of dining restrictions linked to the pandemic affected sales of the same store.
In the next quarter, parent company Olive Garden expects sales to deteriorate, down 30% to 35%.
The company’s shares fell more than 1% in pre-market trading.
Here’s what the company reported for the quarter ending November 29 compared to what Wall Street was expecting, based on an analyst survey by Refinitiv:
- EPS: 73 cents versus 71 cents expected
- Revenue: $ 1.66 billion versus $ 1.69 billion expected
The company reported second-quarter net income of $ 96 million, or 73 cents per share, up from $ 24.7 million, or 20 cents a share, a year ago. Analysts in a Refinitiv poll had forecast earnings of 71 cents a share.
Net sales It fell 19.4% to $ 1.66 billion, missing expectations of $ 1.69 billion. Same store sales across all of its brands decreased 20.6% during the quarter. Sales were also affected by Thanksgiving time, which moved from the fiscal third quarter to the second quarter of the fiscal year this year.
Olive Garden, the jewel of Darden’s portfolio, saw same store sales drop 19.9%. LongHorn Steakhouse, which has seen strong demand for its ready-to-eat orders, reported a drop in same-store sales of only 11.1%.
Darden’s fine dining business, which includes The Capital Grille, has been hit the hardest. Same division sales fell 31% in the first quarter.
During the previous quarter’s earnings call, CEO Jin Lee said that Darden needs countries to ease dining restrictions in order to improve sales for the same store. Instead, with new Covid-19 cases on the rise, conservatives have done the opposite. Nearly a quarter of Darden’s restaurants closed their dining rooms by December 13, up from just 8% of their locations in the week ending November 8.
In November and December, sales of the same storefronts in Darden declined sequentially as more states reinstated restrictions on eating with attendance, and temperatures increased. After declining only 23.4% in the week ending November 8, same store sales were down 36.9% by the week ending December 13th.
In the third quarter of the fiscal year, Darden expects net earnings per share from continuing operations of 50 cents to 75 cents. The company repeated its forecast for the full year of 35 to 40 net new restaurants and total capital expenditures from $ 250M to $ 300M.
Darden also said it will pay a dividend of 37 cents to shareholders on Feb.1.