Darden shares tumble after missing earnings, revenue estimates

Investing.com -- Darden Restaurants, Inc. shares fell 8.4% premarket on Thursday after the Olive Garden parent reported fiscal first quarter earnings and revenue that missed analyst expectations, while maintaining guidance that barely meets consensus forecasts.

The restaurant operator reported adjusted earnings per share of $1.97 for the quarter ended August 24, falling short of the $2.00 analyst estimate. Revenue came in at $3 billion, below the consensus expectation of $3.04 billion, despite increasing 10.4% compared to the same period last year.

Same-restaurant sales increased 4.7% across Darden’s portfolio, with Olive Garden posting a 5.9% gain and LongHorn Steakhouse rising 5.5%. Fine Dining was the only segment to show weakness with a 0.2% decline. The company’s Other Business segment, which now includes recently acquired Chuy’s Tex Mex restaurants, saw same-restaurant sales increase 3.3%.

"We had a strong start to the fiscal year with same-restaurant sales and earnings growth that exceeded our expectations," said Darden President & CEO Rick Cardenas. "The strength of our results is a testament to the power of our strategy."

Despite management’s positive tone, investors reacted negatively to the results, sending shares sharply lower. The company maintained its full-year earnings guidance of $10.50 to $10.70 per share, which barely meets the analyst consensus of $10.69 at the high end.

Darden updated its fiscal 2026 outlook, projecting total sales growth of 7.5% to 8.5%, including approximately 2% growth related to the 53rd week in the fiscal year. The company expects same-restaurant sales growth of 2.5% to 3.5% and plans to open approximately 65 new restaurants.

During the quarter, Darden repurchased approximately 0.9 million shares of its common stock for $183 million and declared a quarterly cash dividend of $1.50 per share, payable on November 3.