Olive Garden Parent Darden Reveals Weaker Profit
Darden Restaurants (NYSE:DRI) reported a 6% drop in first-quarter profit on weaker-than-expected growth at its Olive Garden stores, and while the company confirmed its fiscal guidance, it said actual results will likely near the lower end of the forecast.
The Orlando, Fla.-based operator of chain restaurants such as LongHorn Steakhouse and Red Lobster, booked net income of $106.6 million, or 80 cents a share, compared with $113.1 million, or 82 cents a share, in the same quarter last year.
Revenue for the three months ended Aug. 28 was $1.94 billion, up 7.5% from $1.81 billion a year ago, just beating the Street’s view of $1.93 billion. Leading the growth was combined same-restaurant sales growth of 2.8% for its top three restaurant chains, partially offset by lower-than-expected growth at Olive Garden and impacts from Hurricane Irene.
“Olive Garden remains one of the strongest brands in the full-service restaurant industry and we are working to improve its sales performance during the balance of the year,” the company’s chief executive, Clarence Otis, said in a statement.
With the help of improvements in the Olive Garden chain and more neutral commodity costs, the company still anticipates earnings per share growth in the range of 12% to 15%, though it expressed confidence that its actual results will be closer to the lower-end of the range.
Darden said it plans to open 90 new restaurants in fiscal 2012, and it predicts sales growth between 6.5% and 7.5%.