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Darden Restaurants Inc (NYSE:DRI)
Gross Profit
$1,409 Mil (TTM As of Nov. 2014)

Darden Restaurants Inc's gross profit for the three months ended in Nov. 2014 was $289 Mil. Darden Restaurants Inc's gross profit for the trailing twelve months (TTM) ended in Nov. 2014 was $1,409 Mil.

Gross Margin is calculated as gross profit divided by its revenue. Darden Restaurants Inc's gross profit for the three months ended in Nov. 2014 was $289 Mil. Darden Restaurants Inc's revenue for the three months ended in Nov. 2014 was $1,559 Mil. Therefore, Darden Restaurants Inc's Gross Margin for the quarter that ended in Nov. 2014 was 18.56%.

Darden Restaurants Inc had a gross margin of 18.56% for the quarter that ended in Nov. 2014 => No sustainable competitive advantage

During the past 13 years, the highest Gross Margin of Darden Restaurants Inc was 24.01%. The lowest was 18.90%. And the median was 22.01%.

Warning Sign:

Darden Restaurants Inc gross margin has been in long term decline. The average rate of decline per year is -1.3%.


Definition

Gross Profit is the different between the sale prices and the cost of buying or producing the goods.

Darden Restaurants Inc's Gross Profit for the fiscal year that ended in May. 2014 is calculated as

Gross Profit (A: May. 2014 )=Revenue - Cost of Goods Sold
=6285.6 - 4990.5
=1,295

Darden Restaurants Inc's Gross Profit for the quarter that ended in Nov. 2014 is calculated as

Gross Profit (Q: Nov. 2014 )=Revenue - Cost of Goods Sold
=1559 - 1269.7
=289

Darden Restaurants Inc Gross Profit for the trailing twelve months (TTM) ended in Nov. 2014 was 472.2 (Feb. 2014 ) + 334.1 (May. 2014 ) + 313.2 (Aug. 2014 ) + 289.3 (Nov. 2014 ) = $1,409 Mil.

Gross Profit is the numerator in the calculation of Gross Margin:

Darden Restaurants Inc's Gross Margin for the quarter that ended in Nov. 2014 is calculated as

Gross Margin (Q: Nov. 2014 )=Gross Profit (Q: Nov. 2014 ) / Revenue (Q: Nov. 2014 )
=(Revenue - Cost of Goods Sold) / Revenue
=289 / 1559
=18.56 %

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

A positive Gross Profit is only the first step for a company to make a net profit. The gross profit needs to be big enough to also cover related labor, equipment, rental, marketing/advertising, research and development and a lot of other costs in selling the products.


Explanation

Warren Buffett believes that firms with excellent long term economics tend to have consistently higher margins.

Durable competitive advantage creates a high Gross Margin because of the freedom to price in excess of cost. Companies can be categorized by their Gross Margin

1. Greater than 40% = Durable competitive advantage
2. Less than 40% = Competition eroding margins
3. Less than 20% = no sustainable competitive advantage
Consistency of Gross Margin is key

Darden Restaurants Inc had a gross margin of 18.56% for the quarter that ended in Nov. 2014 => No sustainable competitive advantage


Related Terms

Cost of Goods Sold, Gross Margin, Revenue


Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

Darden Restaurants Inc Annual Data

May05May06May07May08May09May10May11May12May13May14
Gross_Profit 1,1821,2551,3081,4881,5811,6291,8011,8361,3041,295

Darden Restaurants Inc Quarterly Data

Aug12Nov12Feb13May13Aug13Nov13Feb14May14Aug14Nov14
Gross_Profit 485391506-78323380472334313289
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