Darden Q3 Profit Declines, But Meets Estimates; Backs Full-year View

(RTTNews) - Darden Restaurants, Inc. (DRI) Friday reported a decline in third-quarter profit, as total sales dropped with a fall in same-restaurant sales. Earnings per share met analysts' expectations, while revenues missed view. Darden also reaffirmed its previous earnings outlook for fiscal year 2014.

The Orlando-based restaurant operator's net earnings for the third quarter ended February 23, 2014 declined to $109.7 million from $134.4 million in the previous year. On a per share basis, earnings were $0.82, down from $1.02 per share in the third quarter of last year.

On average, 16 analysts polled by Thomson Reuters expected the company to earn $0.82 per share for the quarter. Analysts' estimates typically exclude special items.

The company said the recent-quarter earnings were adversely affected by about $0.13 per share, reflecting lower sales and higher direct costs associated with more severe winter weather than last year, as well as legal, financial advisory and other costs related to implementation of its strategic action plan, announced in December 2013.

Total sales for the quarter declined 1.1 percent to $2.23 billion from $2.26 billion last year. Twenty four analysts estimated revenues of $2.25 billion for the quarter.

The company said the revenue decline reflected a blended same-restaurant sales decline of 5.6 percent for Olive Garden, Red Lobster and LongHorn Steakhouse and a same restaurant-sales decline of 0.7 percent for its Specialty Restaurant Group, partially offset by the operation of 83 net new restaurants compared to the third quarter last year.

In the third quarter, U.S. same-restaurant sales increased 0.3 percent at LongHorn Steakhouse, declined 5.4 percent at Olive Garden, down 8.8 percent at Red Lobster and dropped 0.7 percent at the Specialty Restaurant Group.

Olive Garden sales declined 3.4 percent to $929 million. Red Lobster's sales were $611 million, down 8.7 percent from last year. Meanwhile, Longhorn Steakhouse's sales increased 9.1 percent to $363 million, and the Specialty Restaurant Group's sales grew 11.6 percent to $320 million.

According to the company, Specialty Restaurant Group's sales were driven mainly by same-restaurant sales increases of 0.8 percent at Bahama Breeze and 0.1 percent at the Capital Grille, offset by same-restaurant sales declines of 0.1 percent at Yard House, 2.9 percent at Eddie V's and 4.4 percent at Seasons 52.

Total costs and expenses advanced to $2.11 billion from $2.09 billion last year. The company affirmed its current projection for net earnings per share for fiscal year 2014 to decline between 15 and 20 percent from fiscal 2013, excluding any costs incurred in the third and fourth quarters in connection with the implementation of the strategic action plan announced in December. Analysts project earnings of $2.47 per share for the fiscal.

The board also declared a quarterly cash dividend of $0.55 per share, to shareholders of record on April 10, 2014, payable May 5.

DRI closed Thursday's regular trading at $49.30, up 0.45 percent. In the pre-market activity on Friday, the shares are down 2.62 percent.