Darden Restaurants (DRI) withdraws FY20 outlook and cancels dividend on COVID-19 concerns

Darden Restaurants (NYSE: DRI) surpassed third-quarter 2020 earnings and sales estimates. The dine-in restaurant company withdrew its fiscal 2020 guidance and suspended quarterly dividend amid coronavirus outbreak.

DRI shares, which traded up immediately after the earnings announcement, lost the momentum and traded in the negative territory in the pre-market trading session.

The company posted earnings of $1.89 per share on sales of $2.35 billion for the third quarter of 2020. The market had projected Darden to report earnings of $1.88 per share on revenue of $2.32 billion.

Sales increased 4.5% in the three months ended February 23, 2020, helped by the same-restaurant sales growth of 2.3% and the addition of 40 new restaurants.

Darden pulled out its full-year financial outlook for fiscal 2020 and is fully drawing on its $750 million credit facility. The Board of Directors also suspended the quarterly cash dividend.

These actions were taken by the company as there was a significant reduction in effective restaurant seating capacity and other restrictions mandated by state and local governments in response to COVID-19 outbreak.

When Darden reported the second-quarter results, it guided fiscal 2020 adjusted EPS from continuing operations in the range of $6.30-6.45. The company had projected sales to grow between 5.3% and 6.3% and same-restaurant sales growth of 1-2% for the fiscal year 2020.

Related: How much of a hit could Darden (DRI) take from the coronavirus outbreak?

For the fourth quarter to date through March 15, Darden same-restaurant sales declined 5.9%. Same-restaurant sales were +3.0%, -0.2%, and -20.6% for the first three weeks of the quarter, respectively.

DRI stock, which hit a new 52-week low ($26.15) yesterday, has slumped 69% so far this year.

Follow our Google News edition to get the latest stock market, earnings and financial news at your fingertips