Prospects arrive at an Olive Backyard location in San Antonio, Texas.
Callaghan O’Hare | Bloomberg | Getty Photographs
Darden Eating places on Friday reported quarterly income that fell wanting analysts’ expectations as one other wave of pandemic-related eating restrictions weighed on its same-store gross sales.
For subsequent quarter, usually its better of the 12 months, the Olive Backyard mum or dad expects gross sales to plunge 30% to 35%. CFO Rick Cardenas stated the corporate would not anticipate important gross sales enhancements till the fiscal fourth quarter of 2021, which ends in Might.
Shares of the corporate had been largely unchanged in morning buying and selling.
This is what the corporate reported for the quarter ended Nov. 29 in contrast with what Wall Avenue was anticipating, primarily based on a survey of analysts by Refinitiv:
- Earnings per share: 73 cents vs. 71 cents anticipated
- Income: $1.66 billion vs. $1.69 billion anticipated
The corporate reported fiscal second-quarter internet revenue of $96 million, or 73 cents per share, up from $24.7 million, or 20 cents per share, a 12 months earlier. Analysts surveyed by Refinitiv had been anticipating earnings of 71 cents per share.
Internet gross sales dropped 19.4% to $1.66 billion, lacking expectations of $1.69 billion. Identical-store gross sales throughout all of its manufacturers fell 20.6% throughout the quarter. Gross sales had been additionally impacted by the timing of Thanksgiving, which shifted from its fiscal third quarter to its fiscal second quarter this 12 months.
Olive Backyard, the gem of Darden’s portfolio, noticed its same-store gross sales fall 19.9%. The chain has centered its advertising on its handy pickup choices and core menu gadgets quite than limited-time promotions that might eat into revenue margins. CEO Gene Lee additionally thanked Taylor Swift for name-dropping Olive Backyard in her track “No Physique, No Crime” and stated the staff is “working across the clock” to capitalize on the excitement.
LongHorn Steakhouse, which has seen sturdy demand for its takeout, reported same-store gross sales declines of simply 11.1%. Darden’s nice eating enterprise, which incorporates The Capital Grille, was hardest hit. The section’s same-store gross sales plunged 31% within the quarter.
Throughout the earlier quarter’s earnings name, Lee stated Darden wanted states to loosen their eating restrictions so as to enhance same-store gross sales. As a substitute, as new Covid-19 circumstances surged, governors did the alternative. Roughly 1 / 4 of Darden eating places had closed their eating rooms by Dec. 13, up from simply 8% of its areas within the week ended Nov. 8.
“We have been capable of wind down the companies successfully and change to off-premise, and we’ll be capable to wind them again up,” Lee instructed analysts.
In November and December, Darden’s mixed same-store gross sales fell sequentially as extra states introduced again restrictions on in-person eating and temperatures grew colder. After falling simply 23.4% within the week ended Nov. 8, same-store gross sales had declined 36.9% by the week ended Dec. 13.
To this point within the fiscal third quarter, Darden’s same-store gross sales have fallen 26% from a 12 months in the past.
The corporate reinstated its program to pay workers whose eating rooms closed, costing Darden $three million throughout the quarter.
For its fiscal third quarter, Darden is anticipating internet earnings per share from persevering with operations of 50 cents to 75 cents. Wall Avenue was forecasting earnings of $1.34 per share. The corporate additionally reiterated its full-year outlook of 35 to 40 internet new eating places and whole capital spending of $250 million to $300 million.
Lee stated the corporate is seeing extra availability in actual property, however rents haven’t come down considerably regardless of everlasting closures. Darden is projecting 5% to 15% of eating places will completely shutter as a result of pandemic.
Darden additionally introduced a couple of adjustments to its government management. Cardenas will transition to president and chief working officer in January and Treasurer Rajesh Vennam will take over as chief monetary officer. The board additionally voted to make Lee chairman, changing Charles Sonsteby, the previous CFO of Brinker Worldwide and Michaels Shops.
The corporate pays a 37 cent dividend to shareholders on Feb. 1.