Darden Restaurants beats Wall Street estimates in the third quarter

Darden Restaurants Inc. (NYSE: DRI) reported its financial results for the fiscal third quarter on Thursday that beat Wall Street estimates despite the COVID-19 restrictions.

Darden Restaurant shares were reported about 4% up in premarket trading on Thursday. Including the price action, the stock is now exchanging hands at £101.25 per share. In comparison, it had started the year 2021 at a much lower £84.73 per share.

Darden Restaurants’ Q3 financial results versus analysts’ estimates

Darden Restaurants said that its net income in the third quarter printed at £93.81 million that translates to 71.43 pence per share. In the same quarter last year, its net income stood at a higher £169.32 million, or £1.38 per share.

The restaurant operator reported £1.26 billion of sales in Q3 versus the year-ago figure of £1.71 billion. According to FactSet, experts had forecast the company to post £1.18 billion of sales in the recent quarter. Their estimate for per-share earnings was capped at a lower 51.02 pence. In the prior quarter (Q2), Darden Restaurants had posted £71.22 million of net income.

Darden said that its same-restaurant sales came in 26.7% lower in the third quarter versus a broader 31.2% decline expected. The Orlando-based company saw a 25.8% decline in comparable-sales at Olive Garden, a 12.6% decline at Longhorn Steakhouse, and a much broader 45.2% decline at its fine dining business.

According to CEO Gene Lee, the U.S. firm will invest £12.39 million to appreciate its hourly team members with a one-time bonus. Minimum wage, the chief executive added, will also be raised to £7.29 per hour from Monday. Darden’s earnings report comes only days after RH published market-beating results.

Darden Restaurants’ guidance for the fiscal fourth quarter

For Q4, Darden now expects its adjusted per-share earnings to fall in the range of £1.17 to £1.24. It forecasts £1.53 billion of sales in the ongoing quarter. In comparison, analysts are calling for 91 pence per share of adjusted earnings and £1.42 billion of sales in the fourth quarter.

The NYSE-listed company declared 64.14 pence per share of a quarterly dividend on Thursday. The board also authorized a new stock buyback programme worth £464.45 million.

Darden performed only slightly upbeat in the stock market last year with an annual gain of a little over 5%. At the time of writing, the multi-brand restaurant operator has a market cap of £12.72 billion.