Darden Restaurants 2Q Net Up 37% As Sales Rise; Cuts Fiscal Year View
Shares rose 4.3% to $25 in after-hours trading, although the restaurant-chain operator cut its fiscal-year forecast on expected same-restaurant sales declines.
"Given the challenging economic environment and rising unemployment, we think it's prudent to plan for appreciably softer same-restaurant sales results at Olive Garden, Red Lobster and LongHorn Steakhouse in the second half of our fiscal year," said Chief Executive Clarence Otis Jr.
Darden also said it may write down the value of some intangible assets in the second quarter because of the global economic slowdown and its stock-price volatility.
For the quarter ended Nov. 23, Darden, which owns the Olive Garden, Red Lobster and LongHorn Steakhouse chains, reported net income of $59.7 million, or 43 cents a share, up from $43.5 million, or 30 cents a share, a year earlier.
The latest results included 2 cents a share in costs and adjustments related to the 2007 acquisition of Rare Hospitality International Inc., which owned LongHorn Steakhouse and Capital Grille restaurants. Excluding those items, earnings from continuing operations rose to 44 cents a share from 39 cents.
Revenue rose 9.7% to $1.67 billion.
Analysts' estimates were for per-share earnings of 30 cents on revenue of $1.65 billion, according to a poll by Thomson Reuters.
Darden said combined same-restaurant sales for Olive Garden, Red Lobster and LongHorn Steakhouse fell 0.2% in the quarter.
Same-restaurant sales grew 0.8% at Olive Garden and 0.3% at Red Lobster, while falling 5.7% at LongHorn Steakhouse.
Gross margin rose to 80.4% from 79.5%.
Looking ahead, Darden now expects fiscal-year earnings to fall 1% to 6% on revenue growth of 8% to 9%. In September, it affirmed its outlook for per-share earnings to be flat to up 5% on revenue growth of 12% to 13%. Analysts were looking for earnings of $2.43 a share, down 11%, on revenue of $7.27 billion, up 10%.
Darden is likely to suffer during the recession as more consumers eat at home or at lower-cost restaurants. But Morgan Keegan analyst Robert M. Derrington recently said Darden has managed higher commodities costs better than its peers, in part because of savvy contract negotiating.
Like many other restaurants, Darden has been offering value meals, such as its "Endless Shrimp" promotion at Red Lobster and "Never Ending Pasta Bowl" at Olive Garden.
As of Nov. 23, the company operated a total of 1,734 restaurants, up 4.1% from a year earlier.
-By Kathy Shwiff, Dow Jones Newswires; 201-938-5975; Kathy.Shwiff@dowjones.com
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Publié le 18 Décembre 2008 Copyright © 2008 Dowjones
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