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Chick-News.com Poultry Industry News, Comments and more by Simon M. Shane

Darden Restaurants Reports on FY2021

09/28/2020

Darden Restaurants International (DRI) reported on Q1 of fiscal 2021 on September 24th. For the quarter ending August 30th, the company posted earnings of $36.1 million on revenue $1.527 billion with an EPS of $0.28.  Comparative values for Q1 of FY2020 were net earnings of $170.6 million on revenue of $2.134 billion and an EPS of $1.39.  Sales were down by 28 percent consistent with COVID-restrictions and reduced patronage of casual dining restaurants.

 

For the quarter, the Olive Garden with 871 stores contributed 51.6 percent to sales and 63 percent to operating profit.  The second largest brand, Longhorn Steakhouse with 524 locations generated 24.7 percent of sales and 21 percent to operating profit.  Fine dining and other brands collectively 412 restaurants represented 24 percent of revenue and 16 percent of the contribution.

 

Darden controlled costs of food and beverages attaining a gross margin of 28 percent for both quarters.  The effect of reduced sales and additional wages is reflected in a 32 percent cost of labor compared to 28 percent in Q1 of 2020.

 

In commenting on results Gene Lee CEO sated, “the actions we continue to take in response to COVID-19 which include being laser-focused on execution and strengthening our business model, resulted in significantly improved first quarter performance that exceeded expectations.”

 

Darden provided forward guidance for Q2 2021 as net EPS of $0.65 to $0.75 and sales approximately 20 percent below the corresponding second quarter of 2020.  During fiscal 2021 capital expenditure will attain $250 million for approximately 35 new locations.

 

DRI posted total assets of $9.79 billion with long term debt and lease obligations of $5.83 billion.  Darden Restaurants has a market capitalization of $12.6 billion and trades with a forward P/E ratio of 32.4.  The 52-week range in share price was $26.15 to $124.01 with a 50-day moving average of $87.16.  The share closed on Friday September 25th at $97.17.  Darden posted a trailing 12-month return on equity of -2.1 percent and a return on assets of 2.3 percent.  Operating margin over the trailing 12-month period was 3.8 percent and profit margin -0.7 percent.


 
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