September 28, 2011 – Darden Restaurants (DRI) reported a 6% drop in first-quarter profit on weaker-than-expected growth at its Olive Garden stores, and while the company confirmed its fiscal guidance, it said actual results will likely near the lower end of the forecast.
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The Orlando, Fla.-based operator of chain restaurants such as LongHorn Steakhouse and Red Lobster, booked net income of $106.6 million, or 80 cents a share, compared with $113.1 million, or 82 cents a share, in the same quarter last year.
Revenue for the three months ended Aug. 28 was $1.94 billion, up 7.5% from $1.81 billion a year ago, just beating the Street’s view of $1.93 billion. Leading the growth was combined same-restaurant sales growth of 2.8% for its top three restaurant chains, partially offset by lower-than-expected growth at Olive Garden and impacts from Hurricane Irene.
“Olive Garden remains one of the strongest brands in the full-service restaurant industry and we are working to improve its sales performance during the balance of the year,” the company’s chief executive, Clarence Otis, said in a statement.
With the help of improvements in the Olive Garden chain and more neutral commodity costs, the company still anticipates earnings per share growth in the range of 12% to 15%, though it expressed confidence that its actual results will be closer to the lower-end of the range.
Darden said it plans to open 90 new restaurants in fiscal 2012, and it predicts sales growth between 6.5% and 7.5%.