Darden Restaurants tops analysts’ estimates for earnings and revenue in the third quarter

Darden Restaurants announced it quarterly performance results on Thursday. Beating analysts’ estimates for earnings and revenue, the American multi-brand restaurant operator was seen trading higher on Thursday.

The upbeat earnings report fueled a 20% increase in Darden Restaurant’s stock on Thursday. The gain, however, was unsustainable with the company losing much of it later in the day. At the time of writing, Darden is trading at £29.36 per share in the stock market that translates to around 70% decline in 2020 so far. Its performance in 2019, on the contrary, was reported moderately upbeat with an annual gain of just under 10%.

Darden Restaurants Withdrew Its Financial Guidance For 2020

Amidst the rising pressure from the Coronavirus pandemic, however, Darden withdrew its previously given guidance for 2020 and also said that the quarterly dividend stands suspended directed at protecting the company’s financial performance.

According to Refinitiv, analysts were expecting the company to post £1.99 billion in revenue in the third quarter. In terms of earnings per share, they had forecast £1.61. In its performance report on Thursday, however, Darden said it generated £2.01 billion in revenue and made £1.62 of earning per share in the recent quarter.

At £198.90 million, Darden Restaurants net quarterly income was significantly higher than £191.45 million that was recorded in the same quarter last year. In terms of net sales, the company saw a 4.5% increase to £2.01 billion.

The company also said that its same-store sales across eight brands including LongHorn Steakhouse and The Capital Grill were reported 2.3% up in Q3. Darden Restaurant’s subsidiary, Olive Garden, on the other hand, revealed 2.1% growth in same-store sales. Olive Garden currently account for around 50% of Darden’s overall revenue.

Figures For Same-Store Sales From Darden Restaurants' Businesses

Same-store sales at LongHorn Steakhouse were 3.9% up in the recent quarter while The Capital Grille posted a 4.2% growth in same-store sales. The minimum growth in same-store sales was again reported in Cheddar’s Scratch Kitchen at 1.6%.

Amidst the Coronavirus pandemic and associated disruptions in business operations, Q4 same-store sales, according to Darden, have reduced by 5.9% in Q4 so far. At least 60% of the restaurant operators’ stores switched to “to-go” model to combat the fast spread of Coronavirus.

CFO Rick Cardenas of Darden Restaurants, however, said that it is unlikely that the company will have to take an aggressive stance of temporarily shutting down all of its outlets in the U.S. Darden’s executives estimated a 6 to 8 cents of decline in its EPS (earnings per share) in Q4.