Darden beats Q1 sales and earnings expectations; raises outlook

Darden Restaurants Inc. (DRI) topped analysts’ expectations on sales and earnings for the first quarter of 2019. Shares rose over 4% during premarket trade following the results announcement.

The restaurant chain reported a 6.5% increase in total sales to $2.06 billion compared to the same period last year. The sales increase included a 3.2% growth from the addition of 52 net new restaurants. Blended same-restaurant sales rose 3.3%.

Net income grew to $166.2 million or $1.32 per share from $119 million or $0.93 per share last year. Adjusted diluted EPS from continuing operations was $1.34.

Darden posted net sales increases across all its segments during the quarter. Same-restaurant sales increased across most of its brands except for Cheddar’s Scratch Kitchen and Seasons 52. The highest growth was in Olive Garden where same-restaurant sales rose 5.3%.

Last month, the company was affected by a cybersecurity incident at several of its Cheddar’s Scratch Kitchen restaurants in which payment card information is said to have been compromised. Darden took immediate steps to rectify the situation and is cooperating with the investigation into the incident.

Based on its year-to-date results and expectations for the remainder of the year, Darden increased its outlook for the full year of 2019. The company now expects total sales growth of 5% to 5.5% versus the previous range of 4% to 5%.

Same-restaurant sales are expected to grow 2% to 2.5% versus the previous expectation of 1% to 2%. Diluted EPS from continuing operations is expected to be $5.52 to $5.65 versus the prior range of $5.40 to $5.56.

Darden’s board of directors declared a quarterly cash dividend of $0.75 per common share, payable November 1 to shareholders of record on October 10.