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Investors devoured shares in Darden Restaurants on Monday after the owner of Olive Garden and other casual dining chains delivered stronger than expected fiscal third quarter results and lifted its full year earnings outlook.
The stock jumped more than 4 per cent in after market trading as the company separately also announced that it would acquire Cheddar’s Scratch Kitchen for $780m cash.
Like-for-like sales, a closely followed industry metric, rose 0.9 per cent for the three months to end of February and helped lift overall revenues 1.7 per cent higher to $1.87bn for the period.
Net income came in at $165.6m, or $1.33 a share, a step up from the $105.8m recorded a year earlier thanks to a sharp reduction in interest payment after it used funds raised from an earlier property spin off to pay down debt.
As a result, the company said it now expects diluted net earnings per share to be between $3.95 and $4.00 a share, up from its previous guidance of $3.87 to $3.97 a share. Like-for-like restaurant sales are expected to increase 1.5 per cent this year, compared with the 1-2 per cent growth range it had forecast just three months ago.
“We continued to gain market share as we outperformed industry same-restaurant sales by a considerable margin again this quarter,” said CEO Gene Lee.