Darden Restaurants Soars 6% on Narrower Than Expected Losses in the Fiscal Fourth Quarter
The stock in Darden Restaurants, Inc., (NYSE: DRI) rose nearly 6% to $74.95 per share by midday Thursday after reporting narrower than expected losses in the fiscal fourth quarter.
The operator of Olive Garden and LongHorn Steakhouse said in a statement today that revenue in the quarter ended May was $1.27 billion on a loss of $1.24 a share. The revenue was right in line with the $1.27 billion analysts expected.
In the quarter, Olive Garden same-restaurant sales plunged 39%, while LongHorn tumbled 45%.
It's been a tough year restaurants, as the industry has been forced to lay off of furlough millions of employees. As Covid-19 continues to spread across the U.S. at record levels, the industry could lose $240 billion by the end of the year, according to research from the National Restaurant Association. But that's not all; according to a separate report from the NRA, 75% of restaurant operators don't intend on turning a profit in the near future.
Some good news for Darden, as of the week ending June 21, it has been generating positive operating cash flow. It has more than $1.5 billion in liquidity, as well as over $750 million in cash on hand.
"As we shifted to an off premise only model, we took a disciplined approach to pursue sales opportunities that drove incremental profitability and cash flow," Rick Cardenas, the chief financial officer, said in a statement today.
He added, "This approach, which focused on cash management while investing in our team members, resulted in a better liquidity position than we anticipated earlier in the fourth quarter and is the foundation of our first quarter financial outlook."
After Darden's report, some restaurant chains saw their stocks in the green. The operator of Chili's Grill & Bar Brinker International, Inc. (NYSE: EAT) inched 2% higher to $24.10 per share and the owner of Applebee's and IHOP restaurant chains Dine Brands Global Inc. (NYSE: DIN) gained 1% to $41.23 per share by midday.
Expect the bumpy for Darden to continue, as it expects revenue in the fiscal first quarter of 2021 to be roughly 30% less than what it posted in the same period last year. Meanwhile, it is projecting earnings per share to break even or better. Shares of Darden are down nearly 32% year-to-date.
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