News

Darden Restaurants, Inc. DRI reported third-quarter fiscal 2025 results, with earnings and revenues missing the Zacks Consensus Estimate. The top and bottom lines increased on a year-over-year basis.

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DRI’s Fiscal Q3 Earnings & Revenues

During the fiscal third quarter, Darden reported adjusted earnings per share (EPS) of $2.80, missing the Zacks Consensus Estimate of $2.81. In the prior-year quarter, DRI reported an adjusted EPS of $2.62.

Total sales during the quarter came in at $3.15 billion, missing the consensus mark of $3.2 billion. Sales inched up 6.2% from the prior-year quarter’s level. The upside was backed by a blended same-restaurant sales increase of 0.7%. Also, contributions from 103 Chuy's restaurants and 40 net new restaurants added to the positives.

Darden Restaurants, Inc. Price, Consensus and EPS Surprise

Darden Restaurants, Inc. price-consensus-eps-surprise-chart | Darden Restaurants, Inc. Quote

Sales by Segments

Darden reports business under four segments — Olive Garden, LongHorn Steakhouse, Fine Dining, including The Capital Grille and Eddie V's and Other Business.

During the fiscal third quarter, sales at Olive Garden increased 1.5% year over year to $1.33 billion. Our estimate for the metric was $1.38 billion. Comps in the segment increased 0.6% year over year compared with a 2% rise reported in the previous quarter.

At LongHorn Steakhouse, sales were up 5.1% year over year to $768.1 million. Our estimate for the metric was $781.6 million. Comps in the segment rose 2.6% year over year compared with 7.5% growth reported in the previous quarter.

Sales in Fine Dining increased 3.3% year over year to $385.3 million. Our estimate for the metric was $394.1 million. Comps in the segment fell 0.8% year over year compared with a 5.8% drop reported in the previous quarter.

Sales in Other Business increased 20.2% year over year to $674.3 million. Our estimate for the metric was $617.9 million. Comps in the Other Business fell 0.4% year over year against a 0.7% rise reported in the previous quarter.

DRI’s Q3 Operating Highlights

In the fiscal third quarter, total operating costs and expenses inched up 5.9% year over year to $2.74 billion. The upside was primarily due to increased restaurant expenses, labor costs and marketing expenses. The figure compares to our projection of $2.77 billion.

DRI’s Balance Sheet

As of Feb. 23, 2025, cash and cash equivalents came in at $224.2 million compared with $194.8 million as of May 26.

During the fiscal third quarter, inventories came in at $324.6 million compared with $318 million reported in the previous quarter. As of Feb. 23, 2025, long-term debt was $2.12 billion compared with $1.37 million as of May 26.

During the fiscal third quarter, Darden’s board of directors repurchased approximately 0.3 million shares of its common stock, worth approximately $53 million. As of the fiscal third quarter, the company stated availability of approximately $548 million under the $1 billion repurchase authorization.

Darden’s Fiscal 2025 Outlook

For the fiscal 2025, the company expects total sales to be approximately $12.1 billion. Same-restaurant sales growth in the fiscal 2025 is anticipated to be 1.5% year over year. Adjusted diluted EPS from continuing operations is anticipated in the band of $9.45-$9.52.

The company expects to open 50-55 net new restaurants and projects a total capital spending of approximately $650 million in fiscal 2025.

DRI’s Zacks Rank & Key Picks

Darden currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the Zacks Retail-Wholesale sector have been discussed below.

BJ's Restaurants, Inc. BJRI currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks Rank #1 stocks here.

BJRI has a trailing four-quarter earnings surprise of negative 84.7%, on average. The stock has gained 1.8% in the past six months. The Zacks Consensus Estimate for BJRI’s 2025 sales and EPS indicates growth of 3.3% and 17.7%, respectively, from the year-ago period’s levels.

Brinker International, Inc. EAT presently flaunts a Zacks Rank of 1. EAT has a trailing four-quarter earnings surprise of 24.7%, on average. The stock has surged 81.6% in the past six months.
The consensus estimate for EAT’s 2025 sales and EPS indicates growth of 18.7% and 98.8%, respectively, from the year-ago period’s levels.

Portillo's Inc. PTLO currently sports a Zacks Rank of 1. PTLO has a trailing four-quarter earnings surprise of 62.7%, on average. The stock has declined 5.9% in the past six months.

The Zacks Consensus Estimate for PTLO’s fiscal 2026 sales indicates a rise of 11.7% from the year-ago period’s levels.

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This article originally published on Zacks Investment Research (zacks.com).

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