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Tuesday, June 24, 2008

Darden's 4Q Tops Estimates; Boosted by New Chains

FOXBusiness

Darden Restaurants, operator of the Olive Garden and Red Lobster restaurants, reported an increase in fiscal fourth-quarter profit even as the economy slowed and food prices soared.

Reporting after the market’s close on Tuesday, Darden (DRI) beat the Street by posting adjusted-earnings of 78 cents per share on a 25% jump in sales to $1.83 billion. A year ago, the company earned 67 cents. Analysts polled by Thomson Reuters had been looking for earnings of 75 cents on $1.82 billion in revenue.

Darden, which owns and operates more than 1,300 restaurants in 49 states, was boosted by the addition of recently acquired LongHorn Steakhouse and Capital Grille chains.

While sales from its U.S. Olive Garden locations rose by 5.8% in the fourth quarter, sales at Red Lobster and LongHorn Steakhouse declined.

For the full year, Darden's adjusted-profit rose to $2.74 per share, topping estimates by a penny. Darden's total sales from continuing operations rose by 19% to $6.63 billion.

Darden also upped its quarterly dividend to 20 cents per share, up 11%.

Looking ahead, Darden said it plans to open approximately 75 to 80 new restaurants in fiscal 2009, boosting total sales growth by a range of 14% to 15%.

The market was bullish on Darden’s stock during regular trading on Tuesday, sending the stock up 95 cents, or 3.1%, to $31.60. Shares of Darden have lost almost 30% of their value from a year ago, but are up more than 10% year-to-date.

Darden was also able to beat the Street in its fiscal third-quarter as well, posting an 18% rise in profit.