01—Abstract
Summary
Summary of the 8-K filed March 19, 2026. Cited figures are marked; the original filing is the authoritative source.
Darden Restaurants (DRI) reported fiscal 2026 third-quarter results (quarter ended February 22, 2026) that showed solid top-line momentum and an adjusted earnings beat.
Total sales rose 5.9% to $3.35 billiona, driven by a blended same-restaurant sales increase of 4.2% and 31 net new restaurants. LongHorn Steakhouse (+7.2% same-restaurant sales) and Olive Garden (+3.2%) led the portfolio, and management said both significantly outperformed the industry same-restaurant sales benchmark. Adjusted diluted EPS from continuing operations was $2.95, up 5.4% year over year.
Reported diluted EPS from continuing operations was $2.68b, down from $2.74, reflecting roughly $0.27 of after-tax adjustments, mainly a $0.16 non-cash impairment tied to Bahama Breeze closures, $0.05 of closure and strategic review costs, and a $0.06 income tax benefit. The company raised the low end of its fiscal 2026 adjusted EPS outlook to $10.57–$10.67 (from the prior range, which is not stated in this filing), and now guides to total sales growth of about 9.5%, including roughly 2 points from a 53rd week, and same-restaurant sales growth of about 4.5%. Reported EPS guidance was set at $10.40–$10.50.
Capital returns remained significant: Darden repurchased $127 millionc of stock in the quarter, leaving $516 million under its $1 billion authorization, and declared a quarterly dividend of $1.50 per share payable May 1, 2026. Balance-sheet and cash-flow signals warrant attention. Short-term debt rose to $290 million from zero at fiscal year-end, and nine-month share repurchases ($534 million) and dividends ($522 million) together exceeded operating cash flow of continuing operations ($1.28 billion) after $541 million of capital expenditures.
Retained earnings turned to a deficit of $(217) million and total stockholders' equity declined to $2.10 billiond from $2.31 billion. Investors will likely focus on whether margin pressure from labor and inflation (guided at about 3.5%) is contained and how the Bahama Breeze exit and Chuy's integration progress.
02—Key points
Key Highlights
- Total sales rose 5.9% to $3.35 billion, with blended same-restaurant sales up 4.2% and 31 net new restaurants contributing.
- LongHorn Steakhouse same-restaurant sales grew 7.2%, and Olive Garden grew 3.2%; management says both beat the industry benchmark.
- Adjusted diluted EPS from continuing operations was $2.95, up 5.4%; reported EPS was $2.68, versus $2.74 a year earlier.
- Q3 included a $0.16 non-cash impairment tied to Bahama Breeze closures and $0.05 in closure and strategic review costs.
- FY2026 adjusted EPS guidance is $10.57–$10.67 and sales growth is about 9.5%, including about 2 points from a 53rd week; same-restaurant sales growth is about 4.5%.
- Darden repurchased $127 million of stock in the quarter ($516 million remaining authorization) and declared a $1.50 quarterly dividend.
- Short-term debt rose to $290 million, and stockholders' equity fell to $2.10 billion, with a retained earnings deficit of $(217) million.
03—Questions
Frequently Asked Questions
Why did reported EPS decline while adjusted EPS grew?
Reported diluted EPS from continuing operations fell to $2.68 from $2.74, mainly because of non-recurring items in Q3 2026: a $0.16 non-cash impairment tied to Bahama Breeze restaurant closures, $0.05 of closed-restaurant and strategic review costs, and $0.06 of income tax adjustments and benefits. Excluding these, adjusted EPS rose 5.4% to $2.95, which management presents as the better measure of underlying performance.
What does the updated fiscal 2026 outlook imply for the business?
Darden expects total sales growth of about 9.5%, including roughly 2 points from the 53rd week, and same-restaurant sales growth of about 4.5%. It also plans about 70 new restaurant openings, $750–775 million in capital spending, and about 3.5% total inflation. Adjusted EPS guidance is $10.57–$10.67, with the 53rd week contributing about $0.25.
Is Darden's shareholder return sustainable given recent cash flows?
Darden returned substantial capital in the first nine months of fiscal 2026: $534 million of buybacks and $522 million of dividends, against $1.28 billion of operating cash flow and $541 million of capex. Short-term debt of $290 million was drawn during the period, and the retained earnings deficit widened. Investors should monitor whether free cash flow continues to cover these payouts without further borrowing.
What is happening with Bahama Breeze and Chuy's?
Darden is exploring strategic alternatives for Bahama Breeze. Its 27 locations are expected to close or convert to other brands between Q3 fiscal 2026 and Q4 fiscal 2027, which drives the impairment and closure costs. Chuy's, acquired in 2024, will enter the same-restaurant sales base once Darden has owned it for 16 months, in Q4 fiscal 2026, and its integration costs have largely ended.
What dividend and buyback actions were announced?
Darden declared a quarterly cash dividend of $1.50 per share, payable May 1, 2026, to shareholders of record on April 10, 2026. It repurchased about 0.7 million shares for $127 million in the quarter and has $516 million remaining under its $1 billion repurchase authorization.
04—Continue