Darden profit up, Olive Garden sees strong growth
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Tue, 24 Jun 2008 23:13:01 GMT |
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By Alexandria SageSAN FRANCISCO (Reuters) - Darden Restaurants Inc posted a higher quarterly profit on Tuesday, boosted by the Olive Garden chain, which continued to attract casual diners in the weak economy, and lower costs that helped raise operating profit at its Red Lobster chain.The company, which said it raised its quarterly dividend to 20 cents per share from 18 cents, said that, in fiscal 2009, its U.S. same-store sales at its Red Lobster, Olive Garden and LongHorn Steakhouse chains should rise about 2 percent.Profit in the fiscal fourth quarter from continuing operations was $103.3 million, or 72 cents per share, from $98.5 million, or 67 cents per share, a year earlier.Excluding estimated integration costs and purchase accounting adjustments, earnings from continuing operations were 78 cents per share, above the 75 cents, on average, expected by analysts, according to Reuters Estimates.Chief Operating Officer Drew Madsen said in a statement the quarter and fiscal year had been "challenging," but added the company's brands outperformed the industry.Consumers have been cutting back on meals outside the home amid higher food and fuel costs and a weak housing market. Higher prices on commodities such as milk and wheat have also hit restaurant companies.But Darden's Olive Garden chain has bucked the trend of slumping sales seen at rivals such as Brinker International Inc or, to a lesser degree, Cheesecake Factory Inc . In May, Olive Garden posted an 11 percent rise in same-store sales, a key gauge of retail performance.On a net basis, Darden posted earnings of 71 cents, compared with a year-ago net loss of 38 cents per share, which included results from discontinued operations.The company sold its Smokey Bones Barbeque & Grille chain in January.Revenue from continuing operations rose 25 percent in the quarter to $1.83 billion, slightly above the $1.82 billion, expected by Wall Street, according to Reuters Estimates.Darden's revenue in the quarter included some $290 million of sales from LongHorn Steakhouse and The Capital Grille, which the company acquired through its roughly $1.2 billion acquisition of RARE Hospitality International Inc. That deal was completed in the fiscal second quarter.U.S. same-store sales rose 5.8 percent at Olive Garden during the quarter. They fell 0.2 percent at Red Lobster, however, and fell 3.1 percent at LongHorn Steakhouse, the company said.At Red Lobster, lower food, restaurant and general costs offset higher labor costs and helped boost operating profit, Darden said.Looking ahead, Darden said earnings from continuing operations should rise between 14 percent and 15 percent above the $2.55 per share in fiscal 2008.Excluding integration costs and purchase accounting adjustments, fiscal 2009 earnings growth is to rise 9 percent to 10 percent, including a 53rd week in the year, the company said.Total sales growth should rise between 14 percent and 15 percent, according to Darden.Darden said it planned to buy back about $200 million to $225 million of its common stock in fiscal 2009. It plans to open between 75 to 80 stores in fiscal 2009.Darden shares closed up 3 percent on the New York Stock Exchange at $31.60.(Reporting by Alexandria Sage; Editing by Andre Grenon)
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