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Darden Provides Business Update Amid Coronavirus Crisis

Zacks Equity Research

Darden Restaurants, Inc. DRI recently provided an update on its business and steps that it is undertaking in response to the coronavirus pandemic. 

To contain the spread of this deadly virus, the company’s closed its dine-in services from Mar 20, 2020.  It is now operating its restaurants in a To Go-only capacity. The company announced that more than 90% of its restaurants are currently operational. Notably, it has reduced expenses by deferring capital spending. 

Sales Update

The company’s same-restaurant sales were down 39.1%, for the fourth quarter to date through Apr 5. Moreover, for the first six weeks of the quarter, same-restaurant sales were up 3.0% and down 0.2%, 20.6%, 75.2%, 74.9%, and 71.2%, respectively.

For the fourth quarter to date through Apr 5, same-restaurant sales were down 34.5%, 36.5%, 47.5% and 50.4% at Olive Garden, LongHorn Steakhouse, Fine Dining and Other Business, respectively.

Other Updates

In an effort to bolster liquidity in the current scenario, the company announced that it has entered into a $270 million term loan credit agreement. Moreover, the company declared that its previously drawn $750 million revolving credit agreement hasn’t been utilized. With the current loan agreement, the company now has over $1 billion in investible cash on hand. Following the news, the company’s shares surged 12.5% yesterday, reflecting investor optimism. However, shares of the company have fallen 48.4% in the past three months, compared with the industry’s decline of 23%. The decline can be primarily attributed to the coronavirus outbreak.

The company currently has a Zacks Rank #5 (Strong Sell).

Stocks to Consider

Some better-ranked stocks worth considering in the same space include BJ's Restaurants, Inc. BJRI, Denny's Corporation DENN and Potbelly Corporation PBPB. All these stocks carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

BJ's Restaurants, Denny's and Potbelly have an impressive long-term earnings growth rate of 15%, 9% and 17.5%, respectively.

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BJ's Restaurants, Inc. (BJRI) : Free Stock Analysis Report
 
Darden Restaurants, Inc. (DRI) : Free Stock Analysis Report
 
Denny's Corporation (DENN) : Free Stock Analysis Report
 
Potbelly Corporation (PBPB) : Free Stock Analysis Report
 
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