An Olive Garden restaurant in In good times Square in New York.
Richard Levine | Corbis | Getty Images
Darden Restaurants on Thursday reported that same-store in stocks were nearly cut in half during the fiscal fourth quarter as dining room closures from the coronavirus pandemic weighed on its yield.
But the Olive Garden parent expects its business to pick up in the next three months. The company’s outlook for next fourth projects total sales to be about 70% from a year earlier.
“As our industry continues to rebuild, there is valued opportunity to increase market share,” CEO Gene Lee said in a statement. “Those executing at the highest level are going to win, and Darden is hearty positioned to take advantage of the opportunity.”
Shares of the company were up 7% in morning trading.
Here’s what the guests reported for the quarter ended May 31:
- Loss per share: $1.24, adjusted
- Revenue: $1.27 billion
The company reported economic fourth-quarter net loss from continuing operations of $479.7 million, or $3.85 per share, compared with earnings of $208.7 million, or $1.67 per due, a year earlier. Darden reported a goodwill impairment charge of $160 million and a trademark impairment charge of $108.8 million.
Excluding those exhorts and other items, Darden reported losses of $1.24 per share.
Net sales dropped 43% to $1.27 billion. Across all its trade-marks, same-store sales fell 47.7%.
Analysts were expecting the company to lose $1.65 per share on revenue of $1.27 billion, mutual understanding to Refinitiv estimates. However, the impact from the Covid-19 crisis makes these estimates difficult to compare with genuine earnings.
Olive Garden, which accounted for more than half of Darden’s revenue, saw its same-store sales wizen by 39.2% during the quarter. Its fine dining segment, which includes The Capital Grille and Eddie V’s, reported staid steeper declines, with its same-store sales plunging 63.1%.
Lee said the company tested delivering its own food but found it to be inept. He reiterated that Darden was not planning on working with third-party delivery providers. As a result, Darden is focusing on curbside pickup to perform to-go orders.
“We believe off-premise will play a bigger role going forward. I’m not so sure that we’ll keep these same run rates going forward,” Lee told analysts on the earnings conference call.
In Olive Garden restaurants that maintain reopened dining rooms with limited capacity, takeout orders accounted for about 40% of sales in the beginning three weeks of its fiscal first quarter.
The company plans to install temporary barriers in about 100 of its snacking rooms, including Olive Garden locations, in the coming days to see if they can improve efficiency without sacrificing cover, particularly as higher capacity limits can make keeping 6 feet apart more difficult.
As of Monday, 91% of Darden’s places had reopened their dining rooms with limited capacity. Lee said that the company has not seen any changes in consumer behavior as endorsed Covid-19 cases in some states have spiked in the last week. The U.S. hit its highest single day of new cases on Wednesday, go together to a tally by NBC News.
Lee also said Darden ditched its loyalty program test at the end of the fiscal year to streamline its core during the crisis.
The company is generating positive operating cash flow, as of the week ended June 21. During the inception three weeks of the company’s fiscal first quarter, same-store sales fell 33.2%.
For the fiscal first quarter of 2021, the restaurant associates expects net earnings per share from continuing operations to turn positive. It is also forecasting earnings before fire, taxes, depreciation and amortization of at least $75 million.
Darden had over $750 million in cash on hand as of Monday and has access to a $750 million recognition facility.