Darden Restaurants, Inc. DRI recently provided an update on the impact of the coronavirus pandemic on its business from Feb 24 to Apr 19 (within the fourth quarter).
The company’s same-restaurant sales declined 44.7% over the period. Moreover, for the weeks ended Apr 12 and Apr 19, same-restaurant sales were down 65.2% and 60%, respectively. For the first six weeks of the fourth quarter, same-restaurant sales were up 3.0% and down 0.2%, 20.6%, 75.2%, 74.9% and 71.2%, respectively.
For the Feb 24 to Apr 19 period, same-restaurant sales were down 38%, 42.6%, 55.9% and 59.2% at Olive Garden, LongHorn Steakhouse, Fine Dining and Other Business, respectively.
However, owing to the pandemic, to-go sales for Olive Garden and LongHorn Steakhouse have improved steadily over the past few weeks.
The company said that its weekly cash burn rate has improved to nearly $20 million based on recent performance. The improved cash burn rate, inclusive of capital expenditures, does not include any additional changes to net working capital.
To contain the spread of this deadly virus, the company’s closed its dine-in services from Mar 20, 2020. It is now operating its restaurants in a To Go-only capacity. The company announced that more than 90% of its restaurants are currently operational. Meanwhile, it has reduced expenses by deferring capital spending.
Notably, shares of the Zacks Rank #5 (Strong Sell) company have lost 46.3% in the past three months, compared with the industry’s decline of 16.6%. The decline can be primarily attributed to the impacts of the coronavirus outbreak.
Stocks to Consider
Some better-ranked stocks in the Retail-Wholesale sector are Sprouts Farmers Market, Inc. SFM, Stamps.com Inc. STMP and Potbelly Corporation PBPB. Sprouts Farmers and Stamps.com sport a Zacks Rank #1 (Strong Buy), while Potbelly carries a Zacks rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Sprouts Farmers has three-five year earnings per share growth rate of 3.7%
Stamps.com 2021 earnings are expected to rise 5%.
Potbelly has an impressive long-term earnings growth rate of 17.5%.
Today's Best Stocks from Zacks
Would you like to see the updated picks from our best market-beating strategies? From 2017 through 2019, while the S&P 500 gained and impressive +53.6%, five of our strategies returned +65.8%, +97.1%, +118.0%, +175.7% and even +186.7%.
This outperformance has not just been a recent phenomenon. From 2000 – 2019, while the S&P averaged +6.0% per year, our top strategies averaged up to +54.7% per year.
See their latest picks free >>
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Darden Restaurants, Inc. (DRI) : Free Stock Analysis Report
Sprouts Farmers Market, Inc. (SFM) : Free Stock Analysis Report
Potbelly Corporation (PBPB) : Free Stock Analysis Report
Stamps.com Inc. (STMP) : Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment Research