Darden's Growth & Shareholder Returns
Darden Reports Strong Q4 Sales Growth, Announces $1.5B Buyback and Dividend Hike
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Key Points
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Olive Garden delivered 2.4% same-store sales growth in the quarter, missing analysts' 3.2% expectation.
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LongHorn Steakhouse posted a 9.5% quarterly same-store sales increase, decisively beating estimates of about 7.1%.
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The quarter benefited from an extra fiscal week, pushing total net sales up 13.7% to $3.72 billion.
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Darden raised its quarterly dividend to $1.62 per share, an 8% increase.
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The company introduced a new $1.5 billion share repurchase program that has no expiration date and replaces the prior buyback plan.
Darden Restaurants posted a strong fiscal fourth quarter on June 25, with blended same-store sales up 4.6% and a new $1.5 billion share buyback program with no expiration date. Total net sales rose 13.7% to $3.72 billion, boosted by an extra 53rd fiscal week, according to Yahoo Finance.
The results were a mixed bag. LongHorn Steakhouse crushed expectations with a 9.5% same-store sales jump. But Olive Garden grew only 2.4%, missing its 3.2% target. The company also raised its quarterly dividend 8% to $1.62 per share, GuruFocus reported.
LongHorn Steers the Quarter While Olive Garden Slips
LongHorn Steakhouse was the clear winner of the quarter. Its 9.5% same-store sales gain easily beat the 7.1% analysts expected. Executive VP Todd Giampetroni credited a focus on "center-of-the-plate" quality and operational discipline for the surge, according to the Wall Street Journal.
Olive Garden told a different story. Its 2.4% same-store sales growth fell short of the 3.2% Wall Street expected. Analysts at Bernstein warned that Olive Garden may be losing the "value war" to rivals like Chili's, which have pushed aggressive $10.99 meal deals to attract budget-conscious diners, Yahoo Finance reported.
$1.5 Billion Buyback Signals Confidence in Cash Flow
Darden's board authorized a fresh $1.5 billion share repurchase program with no end date, replacing its prior buyback plan. CFO Raj Vennam said the move "reflects our confidence in Darden's cash flow generation and our commitment to returning value to shareholders, even as we navigate a moderating consumer environment."
The $1.5 billion program suggests Darden sees buying back its own stock as a better use of cash than major acquisitions right now. This often signals a company shifting into a steadier, slower-growth phase rather than chasing rapid expansion.
Guidance Miss Sends Stock Lower Before Markets Open
Despite beating earnings per share estimates — reporting $3.66 versus the $3.63 consensus — DRI shares fell about 3% in pre-market trading, Yahoo Finance reported. The culprit was guidance. Darden projected fiscal 2027 revenue of $13.60 billion to $13.75 billion, with earnings per share of $11.10 to $11.35. Both ranges came in below some Wall Street targets.
CEO Rick Cardenas tried to ease concerns. "Our ability to gain profitable market share in a challenging environment speaks to the strength of our brands," he said on the earnings call. "While Olive Garden faced some headwinds this quarter, our overall portfolio remains resilient." The stock stabilized after the dividend and buyback details landed.
Olive Garden's No-Discounting Strategy Faces Pressure in 2027
Darden has long refused to use deep discounts or limited-time offers at Olive Garden. The brand leans on what it calls "Everyday Value" instead. That approach worked well for years. But in 2026, competitors used heavy promotions to pull in middle-income diners pinched by inflation, according to industry observers at Restaurant Business Online.
BMO Capital Markets analyst Andrew Strelzik flagged the gap between LongHorn and Olive Garden as a key concern heading into fiscal 2027. With 50 to 60 new restaurants planned and capital spending of $600 million to $650 million, Darden is still growing — but investors will be watching closely to see if Olive Garden can close the gap or if the brand needs a new playbook.
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