Darden Restaurants stock falls as Olive Garden reports slower growth

Darden Restaurants on Thursday reported quarterly earnings and revenue that narrowly missed analysts' expectations as same-store sales growth at Olive Garden slows.

Shares of the company fell as much as 5% in premarket trading but pared back their losses as executives reassured investors on the company's earnings conference call. The stock was down about 2% in morning trading.

Short-term challenges like consumers' cyclospora concerns and the World Cup tournament weighed on Darden's same-store sales during the quarter, executives said. However, CEO Rick Cardenas said that Darden's restaurant chains are performing better in September, and costs of key commodities, like beef, are projected to improve later in the fiscal year.

Here's what the company reported for the quarter ended Aug. 30 compared with what Wall Street was expecting, based on a survey of analysts by LSEG:

Darden reported fiscal first-quarter net income of $233.4 million, or $2.04 per share, down from $257.8 million, or $2.19 per share, a year earlier.

The company's same-store sales increased 3.1% during the fiscal quarter as each of Darden's business units reported growth. But the World Cup weighed on demand for Darden's restaurants early in the quarter, dragging the company's same-store sales down by 80 basis points, or 0.8%, CFO Raj Vennam said.

LongHorn Steakhouse was once again the top performer of the portfolio this quarter, as same-store sales rose 6.2%. The chain has overtaken Olive Garden to become Darden's top performer, although it still accounts for a smaller share of the company's overall revenue.

Olive Garden saw its same-store sales inch up 1.1%. While it is still the company's largest chain by both number of locations and sales, Olive Garden has seen its growth weaken as diners have become more choosy about their spending.