Darden Sales Rise on Growing Demand at Olive Garden
Darden Restaurants Inc (NYSE:DRI) reported a 4.9 percent rise in quarterly sales, helped by higher comparable sales at its flagship Olive Garden chain, and raised the lower end of its adjusted profit forecast for the full year.
The company's shares were up 2.4 percent in extended trading.
The quarterly report was the first since activist investor Starboard Value LP ousted Darden's entire board in a stunning loss for the largest full-service restaurant operator in the United States.
Darden said it now expects adjusted profit of $2.25-$2.30 per share from continuing operations for the year ending June 2015, compared with the $2.22-$2.30 it expected earlier.
The company has suffered more than a year of traffic declines at Olive Garden, which accounts for more than half of Darden's overall revenue and about two-thirds of its profit.
Starboard launched a fight to take over Darden's board in May, saying the then-pending sale of Darden's Red Lobster seafood restaurant chain was a "destructive transaction" that ignored the rights of shareholders.
Darden closed its $2.1 billion sale of Red Lobster on July 28. It also announced the year-end departure of Chief Executive Clarence Otis.
Starboard outlined numerous fixes for Darden's Italian-themed Olive Garden chain, including salting the pasta water, boosting alcohol sales, using technology to eliminate "false waits" for tables and cost-effective digital marketing.
Same-restaurant sales at Olive Garden rose 0.5 percent in the quarter, compared with a 0.4 percent fall expected by analysts polled by Consensus Metrix.
Darden reported a loss of $32.8 million, or 26 cents per share, for its second quarter ended Nov. 23, compared with a profit of $19.8 million, or 15 cents per share, a year earlier.
Excluding items, it earned 28 cents per share.
Sales rose to $1.56 billion from $1.49 billion.
Analysts on average had expected a profit of 27 cents per share on revenue of $1.55 million, according to Thomson Reuters I/B/E/S.
The Orlando, Florida-based company's shares closed at $55.91 on the New York Stock Exchange on Tuesday.
(Reporting by Devika Krishna Kumar and Nayan Das in Bengaluru and Lisa Baertlein in Los Angeles; Editing by Joyjeet Das)