With dining restrictions being rolled back across the country, Darden Restaurants Inc. (DRI, Financial) reported before the opening bell on Thursday that its fiscal fourth-quarter 2021 same-store sales nearly returned to 2019 levels.
The Orlando, Florida-based restaurant operator, which owns the Olive Garden, LongHorn Steakhouse, Seasons 52 and Cheddar’s Scratch Kitchen brands, among others, posted adjusted earnings of $2.03 per share for the three-month period ended May 30, topping Refinitiv’s estimates of $1.79. Revenue grew 79.5% from the prior-year quarter to $2.28 billion, surpassing expectations of $2.19 billion.
Same-store sales, an important industry metric, increased 90.4% compared to the same period a year ago, but were down 0.5% from two years prior.
For the full year, Darden recorded adjusted earnings of $4.31 per share on $7.2 billion in revenue, which was down 7.8% from 2020. Same-store sales for the year declined 7.8%.
Same-store sales among its individual brands were also strong during the quarter. Olive Garden, which accounts for half the company’s annual revenue, recorded a 61.9% increase. Compared with the same quarter two years ago, same-store sales for the Italian restaurant were down just 1.5%
LongHorn Steakhouse saw growth of 107.5%. It was the company’s only segment to report positive comparable sales on a two-year basis, with sales doubling last year and rising 13.5% in 2019.
Both restaurant chains also saw their profits rise along with the growing number of returning diners. Darden noted that Olive Garden’s profits quadrupled, while LongHorn’s income climbed nearly 1,000%.
The fine dining segment, which languished during the Covid-19 pandemic, saw the second-biggest improvement as same-store sales popped 143.6%, but was still down 10.6% compared to two years ago.
The other business division reported a 160.7% increase in same-store sales.
In a statement, Chairman and CEO Gene Lee said Darden’s sales performance “exceeded our expectations.”
"I am proud of how our teams welcomed more of our guests back and created memorable experiences,” he added. “Over the last 15 months, we have made numerous strategic investments in our business, while streamlining our operations and improving productivity. Given the business transformation work we have done, and the demand we are seeing from the consumer, we are well positioned to thrive in this operating environment."
During the quarter, Darden said it repurchased approximately 0.3 million shares for $38 million. It has $463.5 million remaining under the current buyback plan. In addition, the company announced it will distribute a dividend of $1.10 per share on Aug. 2 to shareholders of record at market close on July 9.
Darden also issued guidance for fiscal 2022. The company is anticipating total revenue of $9.2 billion to $9.5 billion, which would be up between 5% and 8% from pre-pandemic levels if all of its locations operate at full capacity. It is also forecasting same-store sales growth of 25% to 29%. Diluted net earnings per share are expected to range from $7 to $7.50.
Shares of Darden rose following the announcement. With an $18.37 billion market cap, shares were up 3.31% at $139.94 on Thursday morning. GuruFocus estimates the stock has gained nearly 20% year to date.
