Darden Restaurants Inc (DRI)
Profitability ratios
Return on sales
| May 31, 2025 | May 31, 2024 | May 26, 2024 | May 31, 2023 | May 28, 2023 | |
|---|---|---|---|---|---|
| Gross profit margin | 69.72% | 21.16% | 19.89% | 19.86% | 18.78% |
| Operating profit margin | 11.28% | 11.54% | 11.54% | 11.46% | 11.49% |
| Pretax margin | 9.83% | 10.32% | 10.29% | 10.68% | 10.70% |
| Net profit margin | 8.69% | 9.02% | 9.02% | 9.36% | 9.39% |
The analysis of Darden Restaurants Inc.'s profitability ratios reveals a mixed trend over the observed periods. The gross profit margin exhibits a notable increase from approximately 18.78% on May 28, 2023, to a peak of 21.16% on May 31, 2024. This upward movement suggests improved efficiency in managing cost of goods sold relative to sales, potentially reflecting better pricing strategies or favorable changes in input costs. However, a significant anomaly appears with the data point for May 31, 2025, indicating a dramatic rise to 69.72%. Such an anomaly is likely due to a reporting error, restatement, or a different accounting treatment, as it deviates sharply from prior trends.
The operating profit margin remains relatively stable over the periods, ranging narrowly around 11.46% to 11.54%, with a slight decline to 11.28% by May 31, 2025. This consistency suggests steady operational efficiency and cost control relative to revenue, although minor fluctuations may reflect variations in operating expenses or sales mix.
Pre-tax profit margins follow a similar pattern, consolidating the stability evidenced in operating margins, but showing a gradual decline from approximately 10.70% in May 2023 to 9.83% in May 2025. This decline might relate to increasing non-operating expenses or tax burdens, marginally reducing pre-tax profitability over time.
Net profit margins mirror this downward trend, decreasing from around 9.39% in May 2023 to 8.69% in May 2025. The reduction indicates a gradual compression of net income relative to sales, potentially driven by higher expenses, interest, taxes, or one-time charges not captured directly in the operational metrics.
Overall, Darden Restaurants Inc. demonstrates stability in operational and pre-tax profitability, with gains in gross margin suggesting some improvements upstream in the profit chain. However, the slight decline in net margins indicates pressures on bottom-line profitability. The anomalous spike in gross profit margin for May 31, 2025, warrants further investigation to ascertain its validity and underlying causes.
Return on investment
| May 31, 2025 | May 31, 2024 | May 26, 2024 | May 31, 2023 | May 28, 2023 | |
|---|---|---|---|---|---|
| Operating return on assets (Operating ROA) | 10.82% | 11.61% | 11.61% | 11.73% | 11.73% |
| Return on assets (ROA) | 8.34% | 9.08% | 9.08% | 9.59% | 9.59% |
| Return on total capital | 51.30% | 58.65% | 58.60% | 54.76% | 53.10% |
| Return on equity (ROE) | 45.41% | 45.82% | 45.82% | 44.60% | 44.60% |
The profitability ratios for Darden Restaurants Inc. reveal a generally positive trend over the analyzed periods, with some fluctuations.
The Operating Return on Assets (Operating ROA) remained steady at 11.73% as of May 28 and May 31, 2023. However, there was a slight decline in the subsequent periods, decreasing to 11.61% as of May 26 and May 31, 2024, and further declining to 10.82% as of May 31, 2025. This indicates a marginal reduction in the efficiency of generating operating income from the company's assets over time.
The Return on Assets (ROA), which accounts for total net income relative to total assets, followed a similar pattern. It was stable at 9.59% in the early 2023 period, then decreased to 9.08% in 2024, and further declined to 8.34% by May 2025. The downward trend suggests a diminishing overall efficiency in converting assets into net income.
The Return on Total Capital showed an improvement from 53.10% on May 28, 2023, to a peak of 58.60% as of May 26, 2024. Slightly higher at 58.65% on May 31, 2024, it then experienced a decline to 51.30% by May 31, 2025. The initial rise indicates increased profitability relative to total capital employed, although the subsequent decline suggests some erosion in this efficiency metric over the last year.
The Return on Equity (ROE) remained stable at 44.60% during the early 2023 period. It increased modestly to 45.82% in 2024 before slightly decreasing to 45.41% by May 2025. The relatively high and stable ROE signifies that Darden Restaurants has been effective in generating net income relative to shareholders' equity, although the slight decline in the recent year may reflect emerging pressures or changes in net income or shareholder capital.
Overall, while the profitability ratios demonstrate strong performance in 2023, there are signs of slight declines in asset efficiency and returns on capital and equity over the subsequent periods. This pattern warrants ongoing monitoring to assess whether these trends are temporary fluctuations or indicative of longer-term shifts in profitability.