Darden's Earnings Report Signals Improving Trends, Dividend Reinstated

Olive Garden's parent company Darden Restaurants, Inc. DRI reported mixed fiscal first-quarter results, but management guided towards improving trends.

Earnings Report: Darden said it earned 28 cents per share in the first quarter on revenue of $1.53 billion. By comparison, Street analysts were expecting the company to earn 5 cents per share on revenue of $1.56 billion.

Sales at Olive Garden were down 27.7% year over year at $788.2 million. LongHorn Steakhouse fared better with a 16.3% year-over-year revenue decline at $376.8 million. Total net sales were down 28.4%.

Same-restaurant sales were down 28.2% at Olive Garden and down 18.1% at LongHorn Steakhouse. The Fine Dining segment reported a 39.1% same-restaurant sale decline.

Financial Update: Darden's Board of Directors reinstated a quarterly dividend payment of 30 cents per share. The next dividend will be payable to investors on Nov. 2 to shareholders of record at the close of business on Oct. 9.

Darden also said it's "steadily improving" cash flows and "increased confidence" in its outlook allowed to fully repay a $270 million term loan in the quarter.

Darden ended the quarter with $655 million in cash and another $750 million available through a credit facility.

Outlook: Management expects fiscal second-quarter sales to be down just 18% year over year. Diluted net earnings per share from continuing operation was guided at 65 cents to 75 cents.

The company also reiterated its full-year guidance of opening 35 to 40 net new restaurants and total capital spending of $250 million to $300 million.

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