Darden Restaurants (Darden Restaurants (DRI)) served up a solid fourth-quarter earnings beat on Thursday, but investors are more focused on what's coming next — and they're not loving the menu.
The Olive Garden parent reported adjusted earnings of $3.66 per share for the quarter ended May 31, topping the analyst consensus of $3.63 and jumping from $2.98 a year ago. Revenue came in at $3.719 billion, up 13.7% from last year but just shy of the $3.728 billion analysts were expecting. The sales lift included a 7.6% boost from a 53rd week, a 4.6% increase in blended same-restaurant sales, and contributions from 43 new restaurants.
Cash on hand dipped to $219.5 million from $240 million a year earlier.
“The fourth quarter was a strong finish to an excellent year, one in which we significantly outperformed the industry,” said CEO Rick Cardenas.
But the real story is the outlook. For fiscal 2027, Darden forecast total sales of $13.60 billion to $13.75 billion, roughly in line with the $13.718 billion analyst estimate. However, the company's diluted earnings per share guidance of $11.10 to $11.35 came in below the $11.37 consensus. EBITDA is expected between $2.26 billion and $2.29 billion.
That underwhelming profit forecast sent shares down 3.35% in premarket trading Thursday to $206.30.
Darden plans to open 75 to 80 new restaurants this fiscal year, with capital spending of about $875 million. The company expects total inflation of 3% and an effective tax rate of 13.5%.
On the capital return front, Darden's board declared a quarterly dividend of $1.62 per share, an 8% increase from the prior quarter, payable August 3 to shareholders of record July 10. The board also authorized a new $1.5 billion share repurchase program, replacing the previous authorization with no expiration date. During the quarter, the company bought back 0.7 million shares for $138 million.
“Our strong operating model generates significant and durable cash flows,” said CFO Raj Vennam.
Segment performance showed LongHorn Steakhouse leading the pack with same-restaurant sales growth of 9.5%, followed by Other Business at 4.6%, Olive Garden at 2.4%, and Fine Dining at 1.9%.
Reported diluted net earnings from continuing operations were $3.54 per share. Excluding 12 cents in costs from restaurant closures, impairments, and the Chuy's integration, adjusted earnings were $3.66. The extra week contributed 25 cents to both figures.
So Darden delivered a strong quarter, boosted returns to shareholders, and still got punished. That's the market's way of saying: great past, but what have you done for me lately?
