Darden Reports 9% Drop in Profit as Costs Rise

Overview

• Darden, which reported results Thursday, posted net earnings of $234.3 million, a decline of about 9% from the prior year.
• Total operating costs and expenses rose 7% to $2.88 billion driven by higher prices for food and beverages and increased labor costs.
• Company-wide same-restaurant sales increased 3.1%, short of the roughly 3.3% analyst consensus, with Olive Garden slowing to 1.1% growth and LongHorn Steakhouse gaining 6%.
• Management reaffirmed full-year earnings per share guidance of $11.10 to $11.35 and the stock fell about 1.4% as investors weighed steady guidance against cost pressures.
• Darden’s strong free cash flow supports dividends and buybacks, but its elevated debt level leaves the company more exposed if commodity inflation or weaker consumer spending persist.