On September 21st Darden Restaurants Inc. (DRI) posted the results for the first quarter of fiscal 2024 for the period ending August 27th beating consensus estimates on the top and bottom lines. Darden Restaurants is a bellwether for both casual and fine dining, confronted with problems of reduced discretionary spending, availability and cost of labor and food.
For the quarter, Darden earned $195 million on revenue of $2,731 million with an EPS of $1.59. Comparative values for the first quarter of fiscal 2023 were net earnings of $193 million on revenue of $2,446 million with an EPS of $1.56. Comparing the first quarters of 2023 and the previous fiscal year, revenue was up by 11.7 percent; Operating margin up by 2.0 percent to 10.2 percent but with a decline in profit margin by 10.1 percent.
The Company reported the following sales and segment contributions:-
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Q1 Sales
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Q1 Segment Profit
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($ in millions)
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2024
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2023
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2024
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2023
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Consolidated Darden
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$2,730.6
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$2,446.1
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Olive Garden
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$1,227.9
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$1,130.7
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$262.3
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$216.1
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LongHorn Steakhouse
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$669.8
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$604.6
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$117.4
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$92.0
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Fine Dining
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$273.5
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$183.4
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$39.7
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$30.0
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Other Business
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$559.4
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$527.4
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$84.3
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$72.3
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Darden Restaurants operates 1,998 locations including 906 Olive Garden locations, 549 LongHorn Steakhouses, 77 newly acquired Ruth’s Chris Steakhouses and 452 other units including both casual and fine dining restaurants under seven brands.
For the quarter, Darden posted a 5.0 increase in same restaurant sales with the fine dining group posting a 28 percent decline, offset by a 6.1 percent gain by the Olive Garden and 8.1 percent by LongHorn.
In commenting on performance, Rick Cardenas, president & CEO stated, “Looking across our entire portfolio, I am pleased with our first quarter results," He continued "Our strategy is working. We continue to grow share, strengthen margins, and make meaningful investments in our business while returning capital to shareholders."
In reviewing strategy in the post-COVID period, Cardenas stated on the Investor’s call that the Company will reduce promotions and advertising “Whatever we do is going to elevate brand equity. If it means that our traffic is at the lower end of our guide, then it’s at the lower end of our guide. We’re not going to do things that are going to impact us in the long-term just for short-term.”
On September 20, 2023, the Darden Board of Directors unanimously elected Cynthia (Cindie) T. Jamison as Chair of the Board, succeeding Eugene (Gene) I. Lee, Jr. who, as previously announced, retired from service as a director of the Company on that date. Cardenas stated "I look forward to the opportunity to continue working with Cindie in her new role as Chair. She has been a tremendous steward of our company since joining the Board nine years ago”.
The Company confirmed guidance for FY 2024 with a projected diluted EPS range of $8.55 to $8.85.
Darden Restaurants posted total assets of $11,269 million of which $2,525 million comprised goodwill and trademarks. The company carries long-term debt and lease obligations of $6,796 million. Darden Restaurants had an intraday market capitalization of $18,070 million on September 21st. The company has traded over the past fifty-two weeks in a range of $120.20 to $173.06 with a 50-day moving average of $159.96 and with a forward P/E of 17.0
Over the trailing twelve months, operating margin was 11.4 percent and profit margin 9.4 percent. Return on assets was 7.3 percent and on equity 44.7 percent.