Darden Restaurant (DRI) 2Q 2021 earnings exceeded, sales are short

Customers arrive at an Olive Garden location in San Antonio, Texas.

Callaghan O’Hare | Bloomberg | Getty Images

Darden Restaurants reported quarterly revenue on Friday that lowered analysts’ expectations, as another wave of pandemic restrictions on meals affected sales at the same store.

In the next quarter, Father Olive Garden expects sales to worsen, falling by 30% to 35%.

The company’s shares fell by more than 1% in premarket trading.

Here’s what the company reported for the quarter ended Nov. 29 compared to what Wall Street expected, based on a poll conducted by analysts by Refinitiv:

  • Earnings per share: 73 cents compared to 71 cents expected
  • Revenue: $ 1.66 billion compared to $ 1.69 billion expected

The company reported second-quarter tax revenue of $ 96 million, or 73 cents a share, up from $ 24.7 million or 20 cents a share a year earlier. Analysts surveyed by Refinitiv expected earnings of 71 cents per share.

Net sales it fell 19.4% to $ 1.66 billion, missing expectations of $ 1.69 billion. Sales at the same store for all its brands decreased by 20.6% in the same quarter. Sales were also affected by the Thanksgiving calendar, which moved from its fiscal quarter to the second fiscal quarter of this year.

Olive Garden, the jewel of Darden’s portfolio, registered a decrease in sales at the same store by 19.9%. LongHorn Steakhouse, which registered a strong demand for takeover, reported decreases in sales in the same store by only 11.1%.

Darden’s culinary business, which includes The Capital Grille, has been hardest hit. Sales in the same store in the segment fell 31% in the same quarter.

During last quarter’s earnings call, CEO Gene Lee said Darden needs states to relax its dining restrictions to improve sales in the same store. Instead, as new Covid-19 cases emerged, the governors did the opposite. About a quarter of Darden’s restaurants closed their dining halls by December 13th, compared to just 8% of its locations in the week ending November 8th.

In November and December, the combined sales of the same Darden store fell sequentially, as several states brought back restrictions on the meal in person and temperatures dropped. After falling by only 23.4% in the week ending November 8, sales in the same store fell 36.9% by the week ending December 13.

For the third fiscal quarter, Darden anticipates net earnings per share from continuing operations of 50 cents to 75 cents. The company reiterated its outlook throughout the year, from 35 to 40 new net restaurants and total capital expenditures of $ 250 million to $ 300 million.

Darden also said he would pay a 37-cent dividend to shareholders on Feb. 1.