Darden Restaurants Inc.'s (DRI, Financial) properties serve everything from mouth-watering steaks to fresh seafood -- but it’s not the food that is making investors’ mouths water.
The multi-unit restaurant operator reported on Dec. 17 that it surpassed estimates by 5 cents with quarterly earnings of $1.48 per share. Revenue also exceeded forecasts.
More good news: the corporate parent of such successful chains as Olive Garden, Longhorn Steakhouse and others saw same-store sales rise by a solid 34.4%, beating the 32.6% consensus put together StreetAccount. Not surprisingly, the forecast released by Darden’s top brass was positive.
The company's other restaurant concept include Cheddar's Scratch Kitchen, Yard House, The Capital Grille, Seasons 52, Bahama Breeze Island Grill and Eddie V's Prime Seafood.
As the company reported, total sales for the fiscal 2022 second quarter were $2.3 billion, showing growth of 37.2%. Diluted net earnings per share from continuing operations was $1.48. Ebitda stands at $335 million.
In addition, the company paid $143 million in dividends, while share repurchases totaled $266 million.
Olive Garden sales for the second quarter rose by 5.2% compared to the previous year. At Longhorn Steakhouse, sales were up 22.3% and at Eddie V's, sales increased 21.8%. Cheddar, Yard House, Bahama Breeze and Seasons 52 showed a collective increase in sales of 6.6%.
Olive Garden's year-over-year second-quarter profit margin was 21.8%, up from 18.6% in 2020. LongHorn's profit margin dipped year to year, from 16.1% to 15.3%. However, th eprofit margin for fine dining concepts Capital Grille and Eddie V's rose from 19.6% to 21.0%
For the rest of fiscal year 2022, Darden plans between 35 and 40 restaurant openings, with capital spending of approximately $425 million. Total sales are projected to be $9.55 billion to $9.78 billion. Same-restaurant sales growth is projected at 29% to 31%. Total sales growth compared to the pre-Covid period is projected at 9% to 11%.
Speaking of top brass, Darden also disclosed that its CEO, Eugene Lee, is set to retire this coming May 29. His position will be taken by Ricardo Cardenas, who currently serves in the dual role of president and chief operating officer.
Lee will continue to serve on Darden's board of directors as executive chairman until the 2022 annual meeting of shareholders, the company said in a release. The board unanimously elected Cardenas.
"The Board and I are delighted that Rick will serve as Darden's next CEO," Lee said. "He has deep knowledge of our company and the industry, and has been a valued strategic thought partner to me and the senior management team. I am confident that he has the integrity, vision and leadership skills necessary to ensure Darden and its brands continue to successfully grow and be of service to our team members, our guests and our shareholders."
Cardenas was named president and chief operating officer in January 2021. Previously, he served as Darden's chief financial officer since March 2016. Prior to that, he served as senior vice president and chief strategy officer. Cardenas began his career with Darden as an hourly team member in 1984, before joining the restaurant support center team in 1992. He graduated summa cum laude from the University of Central Florida with a bachelor's degree in finance and accounting. He also earned an MBA from The Amos Tuck School of Business Administration at Dartmouth College.
Following the announcement, shares of Darden were down over 4% at $140.79 on Friday. Year to date, the stock has climbed around 20%.
