Darden's (DRI) Q2 Earnings: Olive Garden Major Growth Driver
Zacks Investment Research | Dec 11, 2018 09:30PM ET
Darden Restaurants, Inc. (NYSE:DRI) is scheduled to report second-quarter fiscal 2019 results on Dec 18. In the last reported quarter, the company’s earnings surpassed the Zacks Consensus Estimate by 8.9%.
How are Estimates Faring?
For the to-be-reported quarter, the Zacks Consensus Estimate is pegged at 91 cents, flat over the past 30 days. This reflects a gain of 24.7% from 73 cents registered in the year-ago quarter. Revenues are expected to be $1,978 million, up more than 5.1% year over year.
Backed by better-than-expected earnings for 16 straight quarters, shares of Darden have gained 17.7% in the past year compared with the industry’s collective growth of 9.2%. Let’s delve deep to unearth the factors that are likely to impact Darden’s second-quarter fiscal 2019 results.
Strength at Olive Garden & LongHorn to Drive Growth
In second-quarter fiscal 2019, Darden’s results are likely to be driven by robust sales at the Olive Garden & LongHorn brands. Olive Garden, which posted the 16th consecutive quarter of positive comps in the first quarter, is likely to continue the trend in the soon-to-be reported quarter.
Growth at Olive Garden is likely to be driven by Brand Renaissance Plan and the To Go business, which offers online ordering at selected locations. The brand is particularly focusing on remodeling and bar refreshes. The revamped restaurants are already generating high same-restaurant sales and returns.
At LongHorn, the company strives to attract its guests by focusing on core menu, culinary innovation and providing regional flavors. It is also working on its marketing strategy to improve execution, customer relationship management and digital advertising as well as strengthen promotional pipeline that leverage the segment’s expertise.
Backed by strategic investments in quality and simplification of operations, Darden continues to focus on strengthening its in-restaurant execution to augment guest experience. Owing to these efforts, segment comps have registered growth for 22 consecutive quarters.
Additionally, the acquisition of Cheddar’s seems to be a great fit in the company’s portfolio as it not only complements Darden’s existing brands but is also expected to aid in attracting more customers, given its extensive appeal.
Cost-Saving Initiatives
Darden has an aggressive cost-management plan, under which it has significantly cut operating costs. The company’s cost cutting is likely to favor earnings growth in the to-be-reported quarter.
Darden Restaurants, Inc. Price and EPS Surprise
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