Darden Restaurants Inc. (DRI) shares jumped 11.7% in Tuesday trading after the Olive Garden parent said it now has $1 billion in cash on hand. The company previously drew down $750 million from its revolving credit agreement, money that the company says has gone untouched. It now has a new $270 million term loan credit agreement. Cash burn rate at the current sales level and with the to-go format is $25 million per week. Darden said same-restaurant sales for the fourth quarter to April 5 slumped 39.1%, with same-restaurant sales falling 75.2%, 74.9%, and 71.2% for the last three weeks, respectively. Darden's portfolio also includes Longhorn Steakhouse. Raymond James analysts note that the company has more than 40 weeks worth of liquidity. "We attribute this move to growing optimism that certain COVID-19 'hot spots' could be close to peaking, and that there could be a light at the end of the tunnel regarding the duration of the COVID-19 disruption," analysts led by Brian Vaccaro. Raymond James upgraded Darden stock to strong buy last week. Darden shares are down 50.8% over the past year while the S&P 500 index is down 6.3% for the last 12 months.
-Tonya Garcia; 415-439-6400; AskNewswires@dowjones.com
(END) Dow Jones Newswires
April 07, 2020 14:04 ET (18:04 GMT)
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