Darden Restaurants (NYSE:DRI) said Friday its third-quarter earnings dropped 18%, as the Olive Garden and Red Lobster parent continued to face weaker sales.
The company reported a profit of $109.7 million, or 82 cents a share, compared to $134.4 million, or $1.02 a share, in the year-ago period. Revenue fell 1.1% to $2.23 billion.
Darden’s bottom line matched Wall Street estimates, which were already lowered after the company warned of negative impacts from winter weather and restructuring costs. Analysts were looking for per-share earnings of 82 cents and revenue of $2.25 billion.
Orlando-based Darden, which also operates the LongHorn Steakhouse chain, caved to activist shareholder pressure in December and announced a spinoff of its struggling Red Lobster chain.
Starboard Value and Barington Capital have remained critical of the company, urging a bigger breakup. They want Darden to put its real estate holdings in a new company and separate its smaller chains, such as The Capital Grille, from its larger restaurants.
Red Lobster’s performance lagged behind its peers in the latest period, with same-restaurant sales falling 8.8%. Olive Garden, Darden’s largest chain, booked a 5.4% decline. Same-restaurant sales rose 0.3% at LongHorn, as revenue jumped 9.1%. The three restaurants were down 5.6% combined.
In the specialty-restaurant segment, which includes The Capital Grille and Bahama Breeze, same-restaurant sales slipped 0.7%.
Darden still backed its full-year earnings outlook, citing better-than-expected progress in cutting costs. However, the guidance doesn’t include expenses related to the separation of Red Lobster.
Food and beverage costs ticked 0.3% higher in the third quarter, and restaurant labor costs fell 0.9%. Total expenses increased 1.3%.
Darden shares retreated 2.6% to $48.01 in pre-market trading. The stock is down 9.3% since the start of the year.