Why did reported Q4 EPS stay flat while adjusted EPS grew 12.5%?

Reported Q4 diluted EPS from continuing operations was $2.58 in both fiscal 2025 and fiscal 2024. The company recorded a $47.7 million non-cash impairment on 22 underperforming restaurants it closed in Q4, along with $9.2 million in restaurant closing costs and $7.0 million in Chuy's transaction and integration costs. Excluding these items, adjusted EPS was $2.98, up from $2.65.

What does the new $1 billion share repurchase authorization mean for shareholders?

The Board authorized up to $1 billion in buybacks with no expiration, replacing the previous authorization. Darden repurchased $418 million in FY2025, so the new program provides capacity for continued buybacks. The pace of repurchases will depend on cash flow and the company's leverage, which increased after the Chuy's acquisition.

What is driving the fiscal 2026 outlook, and does it include a one-time benefit?

The outlook projects total sales growth of 7% to 8% and EPS of $10.50 to $10.70. Roughly 2 percentage points of sales growth and about $0.20 of EPS come from the 53rd week added to fiscal 2026. Same-restaurant sales growth is guided to 2% to 3.5%, with 60 to 65 new restaurant openings and $700 to $750 million in capital spending.

Is there any leadership change investors should know about?

Yes. Olive Garden President Dan Kiernan will retire effective August 31, 2025. John Wilkerson, currently President of Cheddar's Scratch Kitchen, will become President of Olive Garden effective September 1, 2025, after serving as President-elect starting June 23, 2025. Olive Garden is Darden's largest brand, with $5.2 billion in FY2025 sales, so the transition is material.

How did Darden's balance sheet change in fiscal 2025?

Long-term debt rose to $2.13 billion from $1.37 billion, and short-term debt was repaid. Cash on hand increased to $240 million. Total assets grew to $12.6 billion, with goodwill up to $1.66 billion and trademarks up to $1.35 billion, largely from the Chuy's acquisition. Investors should weigh the higher debt against the company's ongoing dividend and buyback commitments.

DRI 8-K: Earnings & Results & Leadership Changes

01—Abstract

Summary

Summary of the 8-K filed June 20, 2025. Cited figures are marked; the original filing is the authoritative source.

Darden Restaurants (DRI) reported fiscal 2025 fourth-quarter and full-year results on June 20, 2025, with sales growing 10.6% in Q4 to $3.3 billion^a and 6.0% for the full year to $12.1 billion.

Growth was supported by a blended same-restaurant sales increase of 4.6% in Q4 (Olive Garden +6.9%, LongHorn +6.7%, Fine Dining -3.3%) and the acquisition of 103 Chuy's restaurants. Adjusted diluted EPS from continuing operations rose 12.5% to $2.98^b in Q4 and 7.5% to $9.55 for the year, excluding Chuy's transaction costs and restaurant closure charges. Reported Q4 diluted EPS was flat at $2.58 because of a $47.7 million impairment tied to closing 22 underperforming restaurants.

Capital return was emphasized. The Board raised the quarterly dividend to $1.50^c per share (a 7.1% increase) and authorized a new $1 billion share repurchase program with no expiration, replacing the prior authorization. Only $51 million was repurchased in Q4 and $418 million for the full year.

Total debt rose to about $2.1 billion^d in long-term debt as of May 25, 2025, up from $1.4 billion, to fund the Chuy's acquisition. Fiscal 2026 guidance calls for total sales growth of 7% to 8% (including roughly 2 points from a 53rd week), same-restaurant sales growth of 2% to 3.5%, 60 to 65 new restaurant openings, and diluted EPS from continuing operations of $10.50 to $10.70.

The company also disclosed a leadership transition: Olive Garden President Dan Kiernan will retire on August 31, 2025, and John Wilkerson will succeed him effective September 1, 2025. Investors should note the mix shift toward Olive Garden and LongHorn, the weakness in Fine Dining, and the rising debt load alongside the capital return commitments.

02—Key points

Key Highlights

Q4 FY2025 total sales rose 10.6% to $3.3 billion, driven by 4.6% blended same-restaurant sales growth and the Chuy's acquisition.
Adjusted diluted EPS from continuing operations grew 12.5% to $2.98 in Q4 and 7.5% to $9.55 for FY2025; reported Q4 EPS was flat at $2.58 due to a $47.7 million restaurant disposition impairment.
Olive Garden (+6.9%) and LongHorn Steakhouse (+6.7%) drove Q4 same-restaurant sales, while Fine Dining declined 3.3%.
Quarterly dividend increased 7.1% to $1.50 per share, payable August 1, 2025.
New $1 billion share repurchase program authorized with no expiration, replacing the prior authorization; only $418 million was repurchased in FY2025.
FY2026 guidance: total sales growth of 7% to 8% (about 2 points from a 53rd week), same-restaurant sales growth of 2% to 3.5%, and diluted EPS of $10.50 to $10.70.
Long-term debt increased to $2.13 billion from $1.37 billion, reflecting $750 million of new debt issuance to fund acquisitions and capital returns.

03—Questions

Frequently Asked Questions

Why did reported Q4 EPS stay flat while adjusted EPS grew 12.5%?
Reported Q4 diluted EPS from continuing operations was $2.58 in both fiscal 2025 and fiscal 2024. The company recorded a $47.7 million non-cash impairment on 22 underperforming restaurants it closed in Q4, along with $9.2 million in restaurant closing costs and $7.0 million in Chuy's transaction and integration costs. Excluding these items, adjusted EPS was $2.98, up from $2.65.
What does the new $1 billion share repurchase authorization mean for shareholders?
The Board authorized up to $1 billion in buybacks with no expiration, replacing the previous authorization. Darden repurchased $418 million in FY2025, so the new program provides capacity for continued buybacks. The pace of repurchases will depend on cash flow and the company's leverage, which increased after the Chuy's acquisition.
What is driving the fiscal 2026 outlook, and does it include a one-time benefit?
The outlook projects total sales growth of 7% to 8% and EPS of $10.50 to $10.70. Roughly 2 percentage points of sales growth and about $0.20 of EPS come from the 53rd week added to fiscal 2026. Same-restaurant sales growth is guided to 2% to 3.5%, with 60 to 65 new restaurant openings and $700 to $750 million in capital spending.
Is there any leadership change investors should know about?
Yes. Olive Garden President Dan Kiernan will retire effective August 31, 2025. John Wilkerson, currently President of Cheddar's Scratch Kitchen, will become President of Olive Garden effective September 1, 2025, after serving as President-elect starting June 23, 2025. Olive Garden is Darden's largest brand, with $5.2 billion in FY2025 sales, so the transition is material.
How did Darden's balance sheet change in fiscal 2025?
Long-term debt rose to $2.13 billion from $1.37 billion, and short-term debt was repaid. Cash on hand increased to $240 million. Total assets grew to $12.6 billion, with goodwill up to $1.66 billion and trademarks up to $1.35 billion, largely from the Chuy's acquisition. Investors should weigh the higher debt against the company's ongoing dividend and buyback commitments.

04—Continue

← View all 8-K filings