Darden Restaurants Inc ( DRI ) shares are dropping after the company reported third-quarter FY24 sales growth of 6.8% year-on-year to $2.975 billion, missing the analyst consensus estimate of $3.025 billion.

The sales growth was driven by sales from the addition of 79 company-owned Ruth’s Chris Steak House (Ruth’s Chris) restaurants and 53 other net new restaurants. Consolidated same-restaurant sales for the quarter declined 1%.

Darden clocked an operating margin of 13%, and the operating income rose 10.7% Y/Y to $387.4 million. Adjusted EPS of $2.62 was in line with the consensus estimate.

Darden generated an operating cash flow of $1.19 billion for nine months. It held $268.1 million in cash and equivalents as of February 25, 2024. Inventories at the end of the quarter were $298.2 million.

Darden’s Board of Directors declared a quarterly cash dividend of $1.31 per share on the common stock, payable on May 1, 2024, to shareholders of record on April 10, 2024.

Also, the Board of Directors authorized a new share repurchase program for up to $1 billion of its outstanding common stock. This repurchase program does not have an expiration and replaces the previously existing share repurchase authorization. 

Outlook: Darden currently sees FY24 adjusted EPS from continuing operations of $8.80-$8.90 (estimate $8.86), excluding approximately $0.35, after-tax, of Ruth’s Chris transaction and integration related costs.

The company previously expected adjusted EPS from continuing operations of $8.75-$8.90, excluding the $0.37 costs.

The company sees FY24 total sales of $11.4 billion (prior view $11.5 billion) against an estimate of $11.506 billion. 

Darden expects FY24 same-restaurant sales growth of 1.5%-2% (previous outlook 2.5%-3.0%).

Price Action: DRI shares are trading lower by 5.77% at $164.50 in premarket on the last check Thursday.