Darden Restaurants Backs FY25 View As Q1 Profit Rises, But Misses View; In Deal With Uber; Stock Up

(RTTNews) - Darden Restaurants Inc. (DRI) on Thursday maintained its fiscal 2025 outlook after reporting higher first-quarter earnings, though it missed the Street estimates. Separately, Darden said it entered into an exclusive multi-year delivery partnership with Uber Technologies, Inc. (UBER) to introduce on-demand delivery, set to begin with Olive Garden in late 2024.

In pre-market activity on the NYSE, Darden shares were gaining around 10 percent to trade at $175, and Uber shares were gaining around 2.2 percent at $75.10.

Uber deal

The company said the agreement with Uber will enable restaurant guests to order on-demand delivery through Darden restaurant channels. Delivery will be handled by Uber Direct, through Uber's national delivery network.

An initial pilot of first-party delivery from a limited number of Olive Garden locations will begin in late 2024. Upon closing the pilot, national expansion at Olive Garden is expected to be complete by May 2025.

Uber Direct, which enables merchants to tap into Uber's delivery technology and logistics network, will power deliveries enabling couriers to bring guests their Olive Garden favorites at home.

Outlook

For fiscal 2025, Darden still expects net earnings per share from continuing operations of $9.40 to $9.60. Analysts on average expect the company to earn $9.50 per share, according to figures compiled by Thomson Reuters. Analysts' estimates typically exclude special items.

Darden CFO Raj Vennam said, "The significant step down in traffic during July, led to our first quarter earnings being lower than expected. Following the softness in July, our sales trend has continued to improve. Considering this recovery as well as the planned initiatives to support the remainder of the fiscal year, we are reiterating our guidance for fiscal 2025."

Dividend

Darden said its Board of Directors declared a quarterly cash dividend of $1.40 per share on the common stock. The dividend is payable on November 1 to shareholders of record at the close of business on October 10.

Q1 Results

In its first quarter, Darden's profit increased from the same period last year but missed the Street estimates.

The company's bottom line came in at $207.2 million, or $1.74 per share, higher than $194.5 million, or $1.59 per share, in last year's first quarter.

Adjusted earnings were $208.8 million or $1.75 per share for the period, compared to $217.0 million or $1.78 per share. Analysts had expected the company to earn $1.83 per share.

The company's sales for the quarter rose 1 percent to $2.757 billion from $2.730 billion last year, driven by sales from 42 net new restaurants. This was partially offset by a blended same-restaurant sales decrease of 1.1 percent.

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