01—Abstract
Summary
Summary of the 8-K filed September 24, 2026. Cited figures are marked; the original filing is the authoritative source.
Darden Restaurants reported first-quarter fiscal 2027 results (quarter ended August 30, 2026) with total sales up 5.1% to $3.2 billiona and blended same-restaurant sales up 3.1% on a fiscal-calendar basis (3.2% on a comparable-calendar basis).
Every segment posted positive same-restaurant sales, led by LongHorn Steakhouse at 6.2%, while Olive Garden grew 1.1% and Fine Dining grew 1.6%. Diluted EPS from continuing operations was $2.05b, up 4.1% from prior-year adjusted EPS of $1.97. Reported EPS was down from the $2.19 GAAP figure a year earlier, because the prior-year quarter included a $42.0 million gain on the Olive Garden Canada sale.
Management reaffirmed full-year fiscal 2027 EPS guidance of $11.10 to $11.35c. The quality of the quarter is mixed beneath the headline. Operating income fell 5.9% to $319.3 million, but excluding the prior-year gain it rose roughly 7%.
Interest expense increased to $50.3 milliond from $45.4 million. Operating cash flow fell 19% to $279.0 million, driven by a $122.2 million working-capital outflow. Free cash flow after capex of $175.3 million was about $104 million, versus roughly $168 million a year earlier.
Shareholder returns of $184.2 million in dividends and $220.8 million in buybacks exceeded free cash flow, and the gap was funded by a $285.9 million increase in short-term borrowings. Short-term debt rose to $979.7 million from $693.6 million, and stockholders' equity declined to $2.07 billion from $2.21 billion. The company also declared a quarterly dividend of $1.62 per share, payable November 2, 2026 to holders of record on October 9, 2026.
It repurchased about 1.1 million shares for $222.3 million and has $1.3 billion remaining under its $1.5 billion authorization. The press release notes that Bahama Breeze, with 10 units remaining versus 28 a year earlier, is expected to be closed or converted by Q4 fiscal 2027. Investors will likely focus on whether improving same-restaurant sales can support earnings growth and sustain shareholder returns without further increasing leverage.
02—Key points
Key Highlights
- Total sales rose 5.1% to $3.2 billion; blended same-restaurant sales grew 3.1% (fiscal calendar) and 3.2% (comparable calendar), with all segments positive.
- LongHorn Steakhouse was the standout, with same-restaurant sales up 6.2% and segment profit up 14.6% to $154.6 million; Olive Garden grew only 1.1%.
- Diluted EPS from continuing operations was $2.05, up 4.1% versus prior-year adjusted EPS of $1.97; GAAP EPS fell from $2.19 because of the prior-year $42.0 million Olive Garden Canada gain.
- Operating cash flow declined 19% to $279.0 million on a $122.2 million working-capital outflow, and free cash flow fell to roughly $104 million.
- Dividends ($184.2 million) and buybacks ($220.8 million) exceeded free cash flow; short-term debt rose to $979.7 million from $693.6 million, and equity fell to $2.07 billion.
- Quarterly dividend declared at $1.62 per share (payable November 2, 2026); $222.3 million repurchased, with $1.3 billion left on the $1.5 billion authorization.
- Fiscal 2027 diluted EPS guidance of $11.10 to $11.35 was reaffirmed; the 53-to-52-week calendar shift and Bahama Breeze wind-down affect year-over-year comparisons.
03—Questions
Frequently Asked Questions
Did Darden's earnings grow in the first quarter of fiscal 2027?
On an adjusted basis, yes. Diluted EPS from continuing operations was $2.05, up 4.1% from $1.97 a year earlier. On a GAAP basis, earnings declined: EPS was $2.05 versus $2.19, and pre-tax earnings fell 8.4% to $269.0 million. The gap is due mainly to the $42.0 million prior-year gain on the Olive Garden Canada sale, which is excluded from adjusted results.
Which brand drove same-restaurant sales growth?
LongHorn Steakhouse led with 6.2% fiscal-calendar same-restaurant sales growth and segment profit of $154.6 million, up from $134.9 million. Fine Dining rose 1.6%, Other Business rose 3.8%, and Olive Garden rose only 1.1%, though its segment profit still grew to $270.8 million from $267.6 million.
Is Darden's shareholder return funded by operating cash flow?
Not fully this quarter. Dividends and buybacks totaled about $405 million, while operating cash flow was $279.0 million and capex was $175.3 million. The shortfall was covered by a net $285.9 million increase in short-term borrowings, which raised short-term debt to $979.7 million. Investors should watch whether working-capital timing reverses in later quarters and whether leverage stays manageable.
Is the fiscal 2027 outlook changing?
No. Management reaffirmed all aspects of its full-year fiscal 2027 outlook, including diluted EPS from continuing operations of $11.10 to $11.35. The company is still shifting from a 53-week to a 52-week fiscal year, so year-over-year fiscal-calendar comparisons are offset by one week, and the comparable-calendar figures are provided to adjust for this.
What is the impact of the Bahama Breeze wind-down?
Bahama Breeze had 10 company-owned restaurants at quarter-end, down from 28 a year earlier, and all locations are expected to be closed or converted to other brands by Q4 fiscal 2027. It is excluded from same-restaurant sales. Company-owned restaurant count for continuing operations rose to 2,218 from 2,165, reflecting growth in other brands.
04—Continue