fell on Thursday after the owner of Olive Garden and LongHorn Steakhouse missed sales estimates as inflation remained a “headwind.”
Darden (ticker: DRI) reported earnings of $1.56 per share in its fiscal first quarter ended Aug. 28. That matched Wall Street estimates, according to FactSet. The restaurant chain reported first-quarter revenue of $2.45 billion, narrowly beating analysts’ expectations of $2.47 billion.
Same-store sales growth was also a failure. The company’s overall same-store sales growth of 4.2% beat estimates of 5.1%. The shortfall was led by Olive Garden, with same-store sales 2.3% below consensus of 5.4%, and LongHorn Steakhouse, with same-store sales 4.2% below estimates of 5. 1%.
Total operating costs and expenses were $2.2 billion in the quarter, compared to $2 billion a year ago. Chief Financial Officer Raj Vennam told the company’s conference call that raw material costs rose 15% in the period last year and hourly wages rose 9% in the quarter. .
Managing Director Rick Cardenas said on the call that “During the quarter, we continued to experience significant pressure on commodity costs, and our supply chain team did an excellent work by working with suppliers to minimize or offset cost increases wherever possible.Inflation also remains a headwind for consumers, especially those in households earning less than $50,000 a year.
Despite the challenges the company faced during the quarter, Darden reaffirmed all aspects of its fiscal 2023 financial outlook.
Shares of Darden fell 4.1% on Thursday to $125.89, while the
was down 0.6%. The stock fell 17% in 2022.
Raymond James analyst Brian Vaccaro remains bullish on the catering company and wrote in a research note that “the company continues to generate strong free cash flow which it returns to shareholders.”
Vaccaro rates Darden at Outperform with a 12-month price target of $136.
Write to Angela Palumbo at [email protected]