Why is the reported EPS different from the adjusted EPS?

Reported diluted EPS from continuing operations was $2.03 in Q2. Adjusted EPS of $2.08 excludes $0.03 of Chuy's transaction and integration costs and $0.02 of costs tied to closing 22 underperforming restaurants in Q4 fiscal 2025. Management uses the adjusted figure to show underlying performance, and the non-GAAP reconciliation is included in the release.

How much of the fiscal 2026 sales growth comes from the 53rd week?

The company guides total sales growth of 8.5%-9.3%, of which about 2 percentage points is attributable to the extra week. Same-restaurant sales growth, a 52-week metric, is guided at 3.5%-4.3% and excludes Chuy's and Bahama Breeze. The 53rd week is also expected to add roughly $0.20 to adjusted EPS.

What is driving the change in the one-time gain in the outlook?

The outlook includes a $0.26 per-share gain from the sale of Olive Garden Canada. This gain is included in reported EPS guidance of $10.62-$10.82 but removed to arrive at adjusted EPS of $10.50-$10.70, so the gain does not affect the adjusted range.

Is Darden taking on more debt to fund shareholder returns?

Short-term debt rose to $438 million from zero at May 2025 year-end, and proceeds from short-term debt were $438 million for the six months. Combined with $407 million of buybacks and $349 million of dividends in the first half, cash fell modestly to $224 million. Investors may want to watch whether this borrowing is temporary or part of a longer-term funding pattern.

What are the main risks to the outlook?

Management cited significant commodity headwinds and guided total inflation of about 3.5%, which could pressure restaurant margins. The filing's forward-looking statements also flag labor costs, consumer spending pressure, integration of Chuy's, and the success of new restaurant openings, which are guided at 65-70 units for the year.

DRI 8-K: Earnings & Results

01—Abstract

Summary

Summary of the 8-K filed December 18, 2025. Cited figures are marked; the original filing is the authoritative source.

Darden Restaurants (DRI) reported fiscal 2026 second-quarter results for the quarter ended November 23, 2025, showing top-line strength and solid earnings growth despite commodity headwinds.

Total sales rose 7.3% to $3.1 billion^a, driven by a blended same-restaurant sales increase of 4.3% and 30 net new restaurants. Every segment posted positive same-restaurant sales, with LongHorn Steakhouse (+5.9%) and Olive Garden (+4.7%) leading. Reported diluted EPS from continuing operations was $2.03, and adjusted EPS was $2.08, up 2.5% year over year after excluding Chuy's integration costs and closed-restaurant costs.

Management also returned capital, repurchasing $222 million^b of stock and declaring a quarterly dividend of $1.50 per share. The company raised the low end of its fiscal 2026 adjusted EPS outlook to $10.50-$10.70 and guided total sales growth of 8.5%-9.3%, which includes roughly 2 points from a 53rd week. Same-restaurant sales guidance is 3.5%-4.3%, and management expects 65-70 new openings and $750-775 million in capital spending.

Management also flagged total inflation of about 3.5%. The guidance includes a gain on the Olive Garden Canada sale of $0.26^c per share, which is excluded from adjusted EPS, so investors should focus on the adjusted figure when comparing with prior periods. Balance sheet activity is worth monitoring.

Short-term debt rose to $438 million^d from zero at fiscal year-end, while cash fell to $224 million. Retained earnings turned to a deficit of $(235.7) million, and total stockholders' equity declined to $2.08 billion, reflecting buybacks and dividends that exceeded earnings in the period.

Operating cash flow was roughly flat at $663 million for the six months, while capital expenditures rose to $375 million. Investors will likely look for continued traffic-driven growth and margin management as commodity costs remain a headwind.

02—Key points

Key Highlights

Total sales rose 7.3% to $3.1 billion in Q2 FY2026, with blended same-restaurant sales up 4.3%; every segment posted positive comps.
Adjusted diluted EPS from continuing operations was $2.08, up 2.5%; reported EPS was $2.03 after $0.05 of Chuy's and closed-restaurant costs.
Fiscal 2026 adjusted EPS outlook set at $10.50-$10.70, with total sales growth of 8.5%-9.3% including about 2 points from a 53rd week.
Management repurchased $222 million of stock in the quarter and has $643 million remaining under its $1 billion authorization.
Quarterly dividend declared at $1.50 per share, payable February 2, 2026, to holders of record on January 9, 2026.
Short-term debt increased to $438 million from zero at fiscal year-end, while cash declined to $224 million.
Olive Garden Canada sale produced a $0.26 per-share gain, which is excluded from adjusted guidance.

03—Questions

Frequently Asked Questions

Why is the reported EPS different from the adjusted EPS?
Reported diluted EPS from continuing operations was $2.03 in Q2. Adjusted EPS of $2.08 excludes $0.03 of Chuy's transaction and integration costs and $0.02 of costs tied to closing 22 underperforming restaurants in Q4 fiscal 2025. Management uses the adjusted figure to show underlying performance, and the non-GAAP reconciliation is included in the release.
How much of the fiscal 2026 sales growth comes from the 53rd week?
The company guides total sales growth of 8.5%-9.3%, of which about 2 percentage points is attributable to the extra week. Same-restaurant sales growth, a 52-week metric, is guided at 3.5%-4.3% and excludes Chuy's and Bahama Breeze. The 53rd week is also expected to add roughly $0.20 to adjusted EPS.
What is driving the change in the one-time gain in the outlook?
The outlook includes a $0.26 per-share gain from the sale of Olive Garden Canada. This gain is included in reported EPS guidance of $10.62-$10.82 but removed to arrive at adjusted EPS of $10.50-$10.70, so the gain does not affect the adjusted range.
Is Darden taking on more debt to fund shareholder returns?
Short-term debt rose to $438 million from zero at May 2025 year-end, and proceeds from short-term debt were $438 million for the six months. Combined with $407 million of buybacks and $349 million of dividends in the first half, cash fell modestly to $224 million. Investors may want to watch whether this borrowing is temporary or part of a longer-term funding pattern.
What are the main risks to the outlook?
Management cited significant commodity headwinds and guided total inflation of about 3.5%, which could pressure restaurant margins. The filing's forward-looking statements also flag labor costs, consumer spending pressure, integration of Chuy's, and the success of new restaurant openings, which are guided at 65-70 units for the year.

04—Continue

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