Shares of Olive Garden parent company Darden Restaurants fell as much as 5% Thursday morning after it reported slower-than-expected sales growth.
The stock, valued at $14.9 billion, is up 23% so far this year.
During its fiscal first quarter ended Aug. 25, Darden saw same-store sales growth of 0.9% across all of its restaurants, which includes LongHorn Steakhouse and the Capital Grille. Analysts surveyed by Refinitiv were expecting the company to report same-store sales growth of 1.3%.
Net sales rose 3.5% to $2.13 billion, narrowly falling short of expectations of $2.14 billion.
Olive Garden, which accounts for more than half of its total sales, saw same-store sales growth of 2.2%, despite sales declines across the wider casual dining industry. Higher prices, as well as customers picking more expensive items, drove the same-store sales growth this quarter as Olive Garden once again experienced negative traffic.
CEO Eugene Lee expressed surprise about declining same-store sales growth across the industry, given strong wage growth and low unemployment.
"I personally believe that there's uncertainty entering into the consumer. And it's impacting their confidence," he told analysts on the conference call.
The restaurant company did top estimates for its earnings. Darden reported adjusted earnings of $1.38 per share, beating the $1.36 per share expected by Wall Street.
Darden reiterated its fiscal 2020 forecast, predicting same-store sales growth of 1% to 2% and earnings per share in a range of $6.30 to $6.45. Still, executives said that Hurricane Dorian, which struck the Bahamas and then swept across Southeastern states, had a "meaningful drag" on the fiscal second quarter. Darden expects that the hurricane will negatively impact same-store sales growth by 0.2% to 0.3%.
The company also authorized a new $500 million stock buyback program.