Olive Garden Owner Darden's Sales Rise

Reuters

Darden Restaurants reported better-than-expected profit and sales as changes to the menu and service at its Olive Garden restaurants attracted more customers and price hikes boosted revenue.

Shares of the company, which has been undergoing organizational changes under largest investor Starboard Value, rose 4.6 percent to $73.50 in premarket trading on Tuesday.

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Darden said same-restaurant sales at Olive Garden rose 2.7 percent in the first quarter. Analysts on average had expected a rise of 2.5 percent, according to research firm Consensus Metrix.

Darden sold its Red Lobster chain of seafood restaurants last year to focus on its Olive Garden chain, its biggest by sales. The company raised prices this year and made changes to improve the menu, ambience and service at its restaurants after Starboard ousted Darden's board in October.

Darden also raised on Tuesday its forecast for full-year adjusted earnings from continuing operations to $3.15-$3.30 per share from $3.05-$3.20.

The company's net income fell to $86.4 million, or 67 cents per share, in the quarter ended Aug. 30 from $503.2 million, or $3.81 per share, a year earlier, when Darden had a gain on the sale of some operations.

Excluding items, Darden earned 68 cents per share from continuing operations.

Revenue rose 5.7 percent to $1.69 billion, the sixth straight quarter of rise.

Analysts on average had expected earnings of 58 cents per share and sales of $1.67 billion, according to Thomson Reuters I/B/E/S.

(Reporting by Yashaswini Swamynathan in Bengaluru; Editing by Kirti Pandey)