Darden (DRI) Beats On Q1 Earnings, Reaffirms FY18 Guidance
Zacks Investment Research | Sep 25, 2017 10:32PM ET
Darden Restaurants, Inc. (NYSE:DRI) reported first-quarter fiscal 2018 adjusted earnings of 99 cents per share, beating the Zacks Consensus Estimate of 98 cents by over 1%. Further, earnings increased 12.5% year over year on the back of higher revenues. Notably, this quarter marked the 12th consecutive earnings beat for the company.
Meanwhile, total revenue of $1.94 billion came slightly above the Zacks Consensus Estimate of $1.93 billion and increased 12.9% year over year.
Behind the Headline Numbers
Since the beginning of fourth-quarter fiscal 2015, Darden started reporting under four new segments: Olive Garden, LongHorn Steakhouse, Fine Dining that includes The Capital Grille and Eddie V's, and Other Business. The Other Business segment include Yard House, Seasons 52, Bahama Breeze, consumer packaged goods, and franchise revenues.
In April 2017, Darden completed the acquisition of small restaurant chain, Cheddar's Scratch Kitchen (Cheddar's), in an all-cash deal worth $780 million from its stockholders including private-equity firms L Catterton and Oak Investment Partners. Excluding certain expenses, Darden anticipates the transaction to be accretive to its adjusted per share in fiscal 2018 by roughly 12 cents per share.
For the reported quarter, the company’s legacy brands posted blended comps growth of 1.7%. In the previous quarter, the company’s comps witnessed an increase of 3.3%, excluding Cheddar's. Meanwhile, the company witnessed an increase in sales across all its brands in the fiscal first quarter.
Sales at Olive Garden were up 3% year over year to $989.9 million. A 1.9% increase in comps at this segment was much lower than prior-quarter comps growth of 4.4%. Traffic fell 0.3%, while there was a 1.5% improvement in pricing and 0.7% growth in menu mix.
Sales at Fine Dining increased 7% to $122.2 million. Comps at The Capital Grille rose 2%, higher than the prior-quarter comps growth of 0.5%. Meanwhile, Eddie V's posted comps growth of 2.5%, lower than the 3.3% improvement recorded in the preceding quarter.
Revenues from Other Business jumped 66% year over year to $419.5 million. But comps at Seasons 52 fell 2.2% for the quarter, as compared to the prior-quarter comps’ decline of 1.3%. Moreover, comps at Yard House inched down 0.4% for the quarter against a 0.1% rise recorded in the last quarter. Meanwhile, comps grew 1.2% at Bahama Breeze, slightly lower than the comps growth of 1.4% in the preceding quarter.
At LongHorn Steakhouse, sales rose 4.7% to $404.5 million. Comps at LongHorn Steakhouse increased 2.6%, lower than the prior-quarter comps growth of 3.5%. Traffic increased 0.1%, while pricing and menu mix grew 1.5% and 1%, respectively.
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For the reported quarter, comps at Cheddar's witnessed a decline of 1.4%
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