Adjusted gross margin contracted 160 basis points to 61.7%, impacted by $9 million in additional tariffs despite mitigation efforts.
Adjusted net earnings per share were $1.26, slightly above guidance.
Adjusted operating profit was $28 million (7% margin), down from $57 million (13.5% margin) in prior year due to investments and challenging environment.
Adjusted SG&A expenses increased 5% to $224 million, driven by new store openings and higher employment and occupancy costs.
Consolidated net sales were $403 million in Q2 2025, down from $420 million in Q2 2024, near the midpoint of guidance ($395M-$415M).
Inventory increased 19% on LIFO basis, primarily due to tariff-related accelerated purchases and capitalized costs.
Long-term debt was $81 million, up from $31 million at fiscal 2024-end, reflecting capital expenditures and share repurchases.
Total company comparable sales declined 5% in Q2, consistent with guidance.
Adjusted diluted net earnings per share were $1.97, up 12.6% from last year.
Darden reported $3 billion in total sales, a 10% increase year-over-year, driven by 4.7% same-restaurant sales growth, acquisition of 103 Chuy's restaurants, and 22 net new restaurants.
Fine Dining segment sales increased 2.7% with 5 net new restaurants, but same-restaurant sales were slightly negative and segment profit margin declined.
LongHorn segment profit margin declined 60 basis points to 17.4%, pressured by higher beef costs and pricing below inflation.
Olive Garden segment profit margin was 20.6%, only 10 basis points below last year despite investments in affordability and delivery fees.
Other Business segment sales increased 22.5% with Chuy's acquisition and 3.3% same-restaurant sales growth, with segment profit margin up 90 basis points to 16.1%.
Restaurant-level EBITDA was 18.9%, 10 basis points lower than last year, impacted by delivery fees and brand mix changes.
Adjusted EPS grew 12% year-over-year to $1.04, the strongest growth rate since 2023.
Adjusted FIFO operating profit was $1.1 billion for the quarter.
E-commerce sales grew 16%, driven by increased households and order frequency, with delivery sales surpassing pickup sales for the first time.
Excluding the pharmacy mix and sale impact, FIFO gross margin rate decreased 9 basis points, in line with expectations to remain margin neutral.
FIFO gross margin rate increased 39 basis points year-over-year, primarily due to the sale of Kroger Specialty Pharmacy and lower supply chain costs.
Fuel sales and profitability declined due to lower retail prices and fewer gallons sold, with expectations for continued lower gallons sold through 2025.
Identical sales without fuel grew 3.4%, marking the sixth consecutive quarter of improvement.
Operating general and administrative (OG&A) rate improved, decreasing 5 basis points year-over-year, and 41 basis points on an underlying basis after adjustments.
Domestic commercial sales grew 12.5% on a 16-week basis, representing 33% of domestic auto parts sales and 28% of total company sales.
Domestic retail same-store sales increased 2.2%, with DIY ticket growth of 3.9% despite a 1.9% decline in traffic.
Earnings per share (EPS) decreased 5.6% year-over-year but increased 1.3% on a 16-week basis after adjusting for the extra week last year.
Free cash flow for the quarter was $511 million, totaling $1.8 billion for FY 2025, supporting strong capital returns including $447 million in share repurchases.
Gross margin was 51.5%, down 103 basis points versus last year, negatively impacted by an $80 million LIFO charge.
International same-store sales grew 7.2% on a constant currency basis but only 2.1% unadjusted due to currency headwinds.
Operating expenses increased 8.7% year-over-year on a 16-week basis, driven by investments in growth initiatives.
Total sales grew 0.6% year-over-year to $6.2 billion for Q4, with a 6.9% increase on a comparable 16-week basis.
Dafinchi
