Darden Restaurants reported mixed quarterly results on Thursday, highlighting both challenges and opportunities within its diverse portfolio, particularly at Olive Garden and within its fine-dining segment.

Quarterly Performance Highlights

Darden reported fiscal fourth-quarter net income of $308.1 million, or $2.57 per share, a slight decline from $315.1 million, or $2.58 per share, a year earlier. Excluding costs related to the Ruth’s Chris acquisition and other items, the company earned $2.65 per share. Net sales rose 6.8% to $2.96 billion, driven by the acquisition of Ruth’s Chris Steak House and 37 other net new locations.

Stock Market Reaction

Despite the mixed results, shares of the company rose more than 2% in premarket trading, reflecting investor optimism.

Same-Store Sales Performance

Darden’s overall same-store sales were flat for the quarter, influenced by weaker-than-expected performance at Olive Garden and its fine-dining restaurants. Olive Garden’s same-store sales fell 1.5%, contrary to analysts' expectations of flat growth, according to StreetAccount estimates. This follows a 1.8% decline in the previous quarter, attributed to reduced spending by low-income consumers.

The fine-dining segment, which includes The Capital Grille and Eddie V’s, saw a 2.6% decline in same-store sales. Although this division now includes Ruth’s Chris, the same-store results for Ruth’s Chris will not be incorporated into the category total for several more quarters.

Conversely, LongHorn Steakhouse, which is emerging as a strong performer within Darden’s portfolio, reported a 4% increase in same-store sales for the quarter.

Outlook for Fiscal 2025

For fiscal 2025, Darden is projecting modest same-store sales growth of 1% to 2%. The company is forecasting earnings per share from continuing operations between $9.40 and $9.60, aligning with Wall Street’s expectations of $9.55 per share. Additionally, Darden anticipates net sales of $11.8 billion to $11.9 billion, slightly below analysts’ expectations of $11.94 billion.

Inflation and Capital Expenditures

Darden is projecting total inflation of 3% for fiscal 2025. The company plans to invest significantly in its operations, with capital expenditures expected to range between $550 million and $600 million.

Strategic Developments

The integration of Ruth’s Chris into Darden’s portfolio is a strategic move aimed at enhancing the company’s fine-dining segment. However, Ruth’s Chris will not be included in Darden’s same-store sales calculations until the second quarter of fiscal 2025.

Conclusion

Darden Restaurants is navigating a complex landscape with mixed quarterly results. The company’s strategic acquisitions and investments signal a commitment to growth and adaptation. The performance of LongHorn Steakhouse is a bright spot, while challenges remain for Olive Garden and the fine-dining segment. Darden’s outlook for fiscal 2025 reflects cautious optimism, with a focus on modest growth and strategic investments to strengthen its market position.