Darden Restaurants, Inc. DRI reported mixed third-quarter fiscal 2018 results, wherein earnings surpassed the Zacks Consensus Estimate while revenues lagged the same.
Adjusted earnings of $1.71 per share beat the consensus estimate of $1.64 by 4.3%. Earnings increased 29.5% year over year on the back of higher revenues. Notably, the quarter marked the 14th consecutive earnings beat for the company. Darden’s impressive earnings also resulted from the company’s relentless efforts in improving the basic operating factors of the business — food, service and atmosphere.
Total revenues of $2.13 billion slightly lagged the consensus mark of $2.15 billion. Revenues, however, increased 13.3% from the prior-year quarter. The upside was driven by 11.3% growth from the addition of 154 Cheddar’s Scratch Kitchen and 34 other new restaurants.
Darden’s shares have rallied 21.2% in the past year, outperforming its industry’s gain of 13.7%.
Revenues by Segments
Darden reports its business under four segments: Olive Garden, Longhorn Steakhouse, Fine Dining, which includes The Capital Grille and Eddie V’s, and Other Business.
In the reported quarter, the company’s legacy brands posted blended comps growth of 2%. In the previous quarter, comps had increased 3.1%. Meanwhile, the company witnessed increased sales across all its segments in the fiscal third quarter.
Sales at Olive Garden were up 3.7% year over year to $1.07 billion. Comps grew 2.2% at the segment, slightly lower than the prior-quarter’s comps growth of 3%. Traffic rose 0.1%, along with 1.7% improvement in pricing and 0.4% growth in menu mix.
Sales at Fine Dining increased 7% to $164.4 million. Comps at The Capital Grille rose 2.8%, lower than the prior-quarter’s comps growth of 3.8%. Eddie V’s also posted comps growth of 2.7%, significantly lower than 6.8% improvement recorded in the preceding quarter.