Investors Punish Darden Restaurants For Tepid Outlook Despite Q4 Earnings Beat
Darden Restaurants, Inc. (NYSE: DRI) announced 32.6 percent growth in profit for the fourth quarter due to lower costs despite 4.7 percent drop in sales. Its earnings also topped the Street analysts' predictions. However, the company offered lower than the expected earnings guidance for the fiscal year 2017.
The stock traded down nearly 5 percent in the pre-market session.
Darden Restaurants reported 32.6 percent increase in net income to $139.6 million or $1.09 a share from $105.3 million or $0.82 a share in the year-ago quarter. Its reported earnings from continuing operations were $1.10 a share. This was $0.02 a share higher than the analysts' estimations of $1.08 a share.
The company's sales from continuing operations fell 4.7 percent to $1.79 billion from $1.88 billion in the previous year quarter. Street predicted the company to generate $1.81 billion revenue. Its same restaurant sales, on a comparable basis, advanced 2.6 percent in the fourth quarter. On a fiscal calendar basis, it was 1.7 percent growth.
Darden's CEO, Gene Lee, commented, "I'm pleased with the results we achieved during the fourth quarter, which wrapped up a year of significant progress improving our operations and financial performance. These results reinforce our firm belief that our strategy is working as we continue to build guest loyalty by relentlessly focusing on our back-to-basics operating philosophy. This focus, together with our competitive advantages, drove our strong performance for the year and increased shareholder value."
The company bought back about $45 million work of its shares during the fourth quarter.
Going forward for the fiscal year 2017, Darden expects earnings to be $3.80-$3.90 a share and same-restaurant sales uptick of 1–2 percent. The company also sees new unit openings of 24–28 restaurants. Street analysts are looking for earnings of $3.99 a share.
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