Darden RestaurantsDRI

Key highlights

• Strong sales momentum: Total sales rose 13.7% to $3.72 billion this quarter, supported by a 4.6% increase in sales at restaurants open at least a year. These results show that the company's core brands are still attracting more diners even as the broader industry faces pressure.
• LongHorn leads growth: Sales at LongHorn Steakhouse locations open at least a year jumped 9.5%, significantly outperforming Olive Garden's 2.4% growth in the same category. The steakhouse brand is becoming a much larger driver of the company's overall success, now contributing over $1 billion in quarterly sales.
• Shareholder returns increasing: The board raised the quarterly dividend by 8.0% to $1.62 per share and approved a new $1.5 billion program to buy back the company's own stock. This move signals management's confidence in their ability to generate extra cash, which reached $1.85 billion in operating cash flow for the full year.
• Efficiency gains lifting profits: Adjusted earnings per share grew 22.8% to $3.66, which is a faster rate than the company's sales growth. This gap shows that the business is getting more efficient at turning its restaurant traffic into actual profit for owners.
• Aggressive expansion outlook: Management expects to open 75 to 80 new restaurants next year, nearly doubling the 43 net new locations it opened this past year. For the full year ahead, the company is forecasting total sales between $13.60 billion and $13.75 billion.

Our take: This was a very strong finish to the year. While the extra week of operations helped the totals, the 9.5% jump in sales at LongHorn Steakhouse shows real and healthy demand. The aggressive plan to open up to 80 new locations next year confirms the long-term growth story is still on track.