Darden Restaurants expanded into delivery and takeout during the Covid-19 pandemic.
Chet Strange/Bloomberg
Darden Restaurants is climbing Thursday after the Olive Garden’s parent posted a strong fiscal third quarter and gave upbeat guidance for the coming one.
Shares of Darden (ticker: DRI) are up 4.6% to $140.07 in mid-morning trading. The stock has gained 12.4% year to date and is up 121.2% in the past 12 months.
The company reported earnings of $128.7 million, or 98 cents a share, down from $1.89 in the year-ago period. Revenue fell 26.1% year over year to $1.73 billion. Analysts were looking for earnings per share of 70 cents on revenue of $1.63 billion.
Darden announced a quarterly cash dividend of 88 cents a share, up from 34 cents, and announced a $500 million share repurchase program. In addition, the company said it would spend $17 million on worker bonuses and would raise raise its minimum hourly wage to $10, including tips, next week. Workers will see further increases, with the company minimum reaching $12 an hour in 2022. On average, hourly workers earn $17 including tips, according to Darden.
Although the Covid-19 pandemic was a blow to dine-in restaurants, like those that Darden operates, the company expanded into delivery and takeout, and took moves to exit the crisis in a stronger position in terms of operating metrics and balance sheet.
Darden finished the quarter ahead of expectations, despite lingering Covid headwinds this past winter, and its forecast and plans to return cash to shareholders are probably bolstering investors’ confidence more Thursday.
Moreover, Darden noted that same-store sales have trended higher in recent weeks: After falling 16% from 2019 pre-pandemic levels at the end of February, comps climbed 5.4% in the week ended Sunday. Bulls have argued that despite high hopes for the reopening, Darden can still recover more quickly than expected.
Write to Teresa Rivas at [email protected]
