Darden Restaurants says sales at Olive Garden slid more than expected in Q2

on Dec 18, 2020
  • Darden Restaurants says sales at Olive Garden slid more than expected in Q2.
  • The multi-brand restaurant operator topped analysts' estimates for profit.
  • Darden forecasts up to 70% annualised decline in sales in the fiscal third quarter.

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Darden Restaurants Inc. (NYSE: DRI) said its profit in the fiscal second quarter topped analysts’ estimates on Friday. Sales at Olive Garden, however, slid more than expected in the recent quarter. In a report published in September, the restaurant operator had reported a hit to its sales in the fiscal first quarter as well.

On the intraday chart, Darden Restaurants shares are currently more than 1% down. The NYSE-listed company has gained close to 250% since its low in March, when the COVID-19 crisis pushed its restaurants into temporarily shutting down.

Darden Restaurants’ Q2 financial results versus analysts’ estimates

Darden Restaurants said that its net income in the quarter that concluded on 29th November printed at £71.22 million that translates to 54.16 pence per share. In the same quarter last year, it had reported a significantly lower £18.32 million of net income, or 14.84 pence per share.

In terms of sales, the multi-brand restaurant operator registered a 19.4% year over year decline in Q2 to £1.23 billion. According to FactSet, experts had forecast the company to post a higher £1.25 billion of sales in the recent quarter. Their estimate for per-share earnings stood at a lower 52.67 pence.

Other prominent figures in Darden’s earnings report on Friday include a 19% annualised decline in sales at Olive Garden to £615.36 million. FactSet Consensus for Olive Garden sales in Q2, in comparison, stood at a higher £634.58 million.

The Orlando-based company said that its comparable-store sales in the second quarter saw a 19.9% decline from last year versus a narrower 17.4% decline expected. Its fine-dining restaurants reported a much broader 31% decline in same-store sales in Q2 versus an 11.1% decline at LongHorn Steakhouse.

Darden Restaurants’ guidance for the fiscal third quarter

For the fiscal third quarter. Darden Restaurants now forecasts its per-share earnings to fall in the range of 37.09 pence per share to 55.64 pence per share. Analysts, on the other hand, are calling for a significantly higher 99 pence per share of earnings in Q3. Darden forecasts an up to 70% annualised decline in its third-quarter total sales versus a much narrower experts’ forecast of 14.9%, as per FactSet.

Darden Restaurants performed fairly upbeat in the stock market last year with an annual gain of close to 10%. At the time of writing, it has a market capitalisation of £11.44 billion.


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