Darden Bags a Profit, Raises its Outlook

Dow Jones Newswires

Darden Restaurants swung to a profit in its latest quarter and boosted its earnings outlook for the year as same-restaurant sales increased across its brands. The company now anticipates fiscal 2016 same-restaurant sales to grow 2.5% to 3% and adjusted earnings of $3.25 to $3.35 a share. The company had previously forecast earnings per share of $3.15 to $3.30. Darden also outlined a new buyback program for up to $500 million of stock, which the company said amounts to about 6.7% of its total shares outstanding. It said the program doesn't have an expiration date. Olive Garden continued to show strength in its turnaround, as same-store sales at the chain of casual Italian restaurants rose 1% during the quarter, marking the chain's fifth consecutive period of same-store-sales growth. As a whole, same-store sales at Darden grew 1.6%, including a 2.6% rise at LongHorn Steakhouse and 1.5% growth at Capital Grille. Darden transitioned from a 53-week to a 52-week fiscal year, offsetting quarter comparisons by one week. Adjusted for the calendar, same-store sales at Darden grew 2.9%. In the quarter ended Nov. 29, Darden reported a profit of $43.2 million, or 33 cents a share, compared with a loss of $32.8 million, or 26 cents, a year earlier. The company said the quarter was hurt 31 cents a share by costs related to its real estate spinoff. Adjusted earnings were 54 cents a share. Revenue increased 3.2% to $1.61 billion. Analysts polled by Thomson Reuters had forecast earnings of 42 cents on $1.62 billion in revenue. Darden also said it completed the spinoff of its Four Corners Property Trust, which includes 424 restaurant properties. The company finished 62 of 64 planned restaurant sale leasebacks. In June, Darden revealed plans to separate some of its real-estate assets, spinning off some restaurants into a publicly traded real-estate investment trust, or REIT, while leasing back other properties, following prodding by activist investor Starboard Value LP. Shares, which have risen 11% this year, edged up about 2% in light premarket trading. Write to Anne Steele at Anne.Steele@wsj.com

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