Shares of Darden Restaurants (NYSE:DRI) were down 5.2% as of 2:15 p.m. EST Thursday after mixed quarterly results from the parent company of restaurant chains such as Olive Garden, LongHorn Steakhouse, and Eddie V's.
More specifically, Darden's quarterly net sales climbed 4.2% year over year to $2.056 billion, helped by a combination of new restaurant locations and a 2.0% increase in same-restaurant sales. That translated to a 21.7% increase in adjusted earnings (from continuing operations) to $138.4 million, or $1.12 per share. Analysts, on average, were looking for lower earnings of $1.07 per share on slightly higher revenue.
"We had a good quarter with continued same-restaurant sales growth outpacing the casual dining industry benchmarks, especially at LongHorn," stated Darden CEO Gene Lee. "We continue to see that consumers are willing to visit brands with compelling value and strong guest experiences."
To be sure, LongHorn steakhouse achieved the company's best same-restaurant sales growth at 6.7%, followed by increases of 1.8% from the Capital Grill, 1.5% from Olive Garden, 0.7% from Yard House locations, and 0.5% at Eddie V's. At the same time, same-restaurant sales fell 3.5% and 3.4% at Darden's smaller Seasons 52 and Bahama Breeze concepts, respectively.
Darden also reiterated its previous full-fiscal-year 2020 outlook for sales growth of 5.3% to 6.3% -- a figure that assumes 1% to 2% same-restaurant sales growth, as well as 2% growth stemming from an extra week in the year relative to fiscal 2019. That should translate to fiscal 2020 adjusted earnings per share of $6.30 to $6.45.
However, most analysts were modeling earnings of $6.40 per share on a 6.1% increase in revenue -- with both figures above the midpoints of Darden's reaffirmed guidance ranges -- indicating Wall Street was hoping for a modest bump to the company's full-year targets.
With Darden Restaurants stock up around 16% in the year leading up to this quarterly report, then, it's no surprise to see shares pulling back modestly as investors absorb the news.