Customers arrive at an Olive Garden location in San Antonio, Texas.
Callaghan O’Hare | Bloomberg | Getty Images
Darden Restaurants reported quarterly revenues on Friday that fell short of analyst expectations as a new wave of pandemic-related eating restrictions weighed on sales at the same store.
Next quarter, Olive Garden’s parent company expects sales to deteriorate, by 30% to 35%.
The company’s stock fell more than 1% in premarket trading.
Here’s what the company reported for the quarter ended November 29 compared to what Wall Street expected, based on an analyst survey by Refinitiv:
- Earnings per share: 73 cents vs. 71 cents expected
- Revenue: $ 1.66 billion vs. $ 1.69 billion expected
The company reported second-quarter net income of $ 96 million, or 73 cents a share, compared to $ 24.7 million, or 20 cents a share a year earlier. Analysts polled by Refinitiv expected a profit of 71 cents per share.
Net sales fell 19.4% to $ 1.66 billion, falling short of expectations of $ 1.69 billion. Same-store sales for all its brands declined 20.6% during the quarter. Revenues were also impacted by the Thanksgiving timing, which shifted from fiscal third quarter to fiscal second quarter this year.
Olive Garden, the pearl of Darden’s portfolio, saw sales in the same store drop by 19.9%. LongHorn Steakhouse, which has seen strong demand for takeout, reported a same-store sales decline of just 11.1%.
Darden’s gastronomic businesses, including The Capital Grille, were the hardest hit. Same-store segment sales declined 31% in the quarter.
During last quarter’s earnings call, CEO Gene Lee said Darden needed states to ease their eating restrictions to improve sales at the same store. Instead, the governors did the opposite, as new Covid-19 cases increased. About a quarter of Darden restaurants had their dining room closed on December 13, compared to only 8% of the locations in the week ending November 8.
In November and December, combined sales at the same Darden store declined consecutively as more states brought up restrictions on in-person dining and temperatures turned colder. After dropping just 23.4% in the week ending November 8, sales at the same store were down 36.9% in the week ending December 13.
For the fiscal third quarter, Darden expects net earnings per share from continuing operations of 50 cents to 75 cents. The company reiterated its full-year outlook of 35 to 40 net new restaurants and total capital expenditures of $ 250 million to $ 300 million.
Darden also said it would pay a dividend of 37 cents to shareholders on Feb. 1.