Darden Earnings Show Sales Gain As Profit Slips
Darden earnings showed sales growth while profit slipped as higher food, beverage and labor costs squeezed margins and could pressure investor positioning.
KEY TAKEAWAYS
- Sales rose 5.1% to $3.2 billion while diluted EPS was $2.05.
- Higher food, beverage and labor costs compressed margins; restaurant labor rose 30 basis points to 32.2%.
- Company reaffirmed fiscal 2027 guidance and returned $406 million in cash via dividends and buybacks.
HIGH POTENTIAL TRADES SENT DIRECTLY TO YOUR INBOX
Add your email to receive our free daily newsletter. No spam, unsubscribe anytime.
Darden Restaurants (DRI) reported fiscal 2027 first-quarter results on Sept. 24, 2026, showing sales growth alongside declining profits. The company attributed the profit squeeze to higher food, beverage, and labor costs while reaffirming its full-year outlook and declaring a dividend.
Sales, Earnings and Comparable-Sales Growth
For the quarter ended Aug. 30, 2026, Darden reported sales of $3.20 billion, up 5.1% from about $3.04 billion a year earlier. Diluted earnings per share from continuing operations were $2.05, while net income fell to $233.4 million, or $2.04 per diluted share, from $257.8 million, or $2.19, in the prior-year quarter. The company’s presentation showed earnings from continuing operations of $234.3 million and an effective tax rate of 12.9%.
Companywide same-restaurant sales rose 3.1% on a fiscal-calendar basis and 3.2% on a comparable-calendar basis. LongHorn Steakhouse led with comparable sales growth of 6.2%, while Olive Garden’s same-store sales increased 1.1%. Fine Dining and the Other Business segment posted gains of 1.6% and 3.8%, respectively. Every Darden business unit reported positive comparable-sales growth for the quarter.
Costs, Margins and Capital Allocation
Operating costs and expenses rose 6.5% to about $2.88 billion. Food and beverage costs totaled $984.9 million, or 30.8% of sales, down 30 basis points year over year. Restaurant labor costs increased 30 basis points to $1.0289 billion, or 32.2% of sales. Companywide earnings before income taxes were $269.0 million, or 8.4% of sales, reflecting a 10-basis-point decline from the prior year. The company attributed the profit decline to higher food, beverage, and labor expenses.
Segment results showed Olive Garden generated about $1.33 billion in sales with segment profit of $270.8 million. LongHorn recorded $860.9 million in sales, up from $776.4 million a year earlier, with segment profit of $154.6 million. Fine Dining produced $304.2 million in sales and $39.6 million in segment profit.
Darden returned approximately $406 million to shareholders through dividends and share repurchases, including $222.3 million in common stock buybacks. The company declared a quarterly dividend of $1.62 per share, payable Nov. 2, 2026, to shareholders of record Oct. 9, 2026. The cash-return figures include a 1% excise tax on net share repurchases related to the Inflation Reduction Act of 2022.
Management reaffirmed fiscal 2027 total-sales guidance of $13.60 billion to $13.75 billion and diluted EPS guidance of $11.10 to $11.35, maintaining previously issued ranges.
Analyst estimates varied, with some surveys placing adjusted EPS near $2.06 and revenue forecasts around $3.21 billion, leading to descriptions of the results as matching or narrowly missing expectations depending on the source.
