Categories Earnings, Retail

Darden (DRI) earnings preview: Higher costs could hurt Q2 2020 results

Darden Restaurants Inc. (NYSE: DRI) is slated to report second quarter 2020 earnings results on Thursday, December 19, before the market opens. Analysts expect the company to report earnings of $1.07 per share on revenue of $2.06 billion.

Darden saw sales growth across all its divisions last quarter and this momentum is expected to continue in the second quarter driving overall topline results. While blended same-restaurant sales rose 0.9% last quarter, the results were mixed across the brands. Olive Garden and LongHorn Steakhouse posted same-restaurant sales increases while Cheddar’s Scratch Kitchen and Seasons 52 saw declines.

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.

Browse through our earnings calendar and get all scheduled earnings announcements, analyst/investor conference and much more!

Most Popular

United Parcel Service (UPS) seems on track to regain lost strength

Cargo giant United Parcel Service, Inc. (NYSE: UPS) ended fiscal 2023 on a weak note, reporting lower revenues and profit for the fourth quarter. The company experienced a slowdown post-pandemic

IPO Alert: What to look for when Boundless Bio goes public

Boundless Bio is preparing to debut on the Nasdaq stock market this week, and become the latest addition to the list of biotech firms that have launched IPOs this year.

Nike (NKE) bets on innovation and partnerships to return to high growth

Sneaker giant Nike, Inc. (NYSE: NKE) has been going through a rough patch for some time, with sales coming under pressure from weak demand and rising competition. Post-pandemic, the company

Add Comment
Loading...
Cancel
Viewing Highlight
Loading...
Highlight
Close
Top