While Olive Garden has delivered comp increases, the drop in
traffic at the division remains a concern. While Darden’s strategy of investing
in remodels coupled with the Brand Renaissance plan and To Go business might help
drive results, higher costs are likely to take a toll on margins.
In the first quarter of 2020, Darden beat earnings expectations while sales missed forecasts. Sales rose 3.5% to $2.13 billion while EPS improved by 4% to $1.37.
Also read: Darden Q1 2020 Earnings Conference Call Transcript
For fiscal year
2020, Darden expects total sales growth of 5.3% to 6.3%, including approx. 2%
growth related to the 53rd week. Same-restaurant sales growth is expected to be
1-2%. The company expects EPS from continuing operations to be $6.30-6.45.
Darden expects approx. 50 gross and 44 net new restaurant openings in the year.
Shares of Darden gained 15% year-to-date and 2% over the past one month. The majority of analysts have rated the stock as Buy and it has an average price target of $130.80.