Darden Q3 Profit Matches View, But Revenues Miss; Backs FY14 EPS View

(RTTNews) - Darden Restaurants Inc. (DRI) reported that its net earnings for the third quarter ended February 23, 2014 dropped to $109.7 million from last year's $134.4 million.

Net earnings from continuing operations in this year's third quarter were $109.5 million, which compares to net earnings from continuing operations of $134.5 million in the third quarter last year.

Third quarter net earnings per share from continuing operations were $0.82, a 19.6% decrease from the $1.02 per share in the third quarter of last year. Analysts polled by Thomson Reuters expected the company to report earnings of $0.82 per share for the quarter. Analysts' estimates typically exclude special items.

The company estimates that net earnings per share for the third quarter were adversely affected by approximately thirteen cents in total by two factors, with: approximately seven cents due to lower sales and higher direct costs associated with more severe winter weather than last year and approximately six cents due to legal, financial advisory and other costs related to implementation of the strategic action plan Darden announced in December 2013.

Third quarter total sales from continuing operations were $2.23 billion, a 1.1% decline from the $2.26 billion generated in the third quarter of last year. Twenty four analysts estimated revenues of $2.25 billion for the quarter. The decline reflects a blended same-restaurant sales decline of 5.6% for Olive Garden, Red Lobster and LongHorn Steakhouse and a same restaurant-sales decline of 0.7% for the Company's 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% at LongHorn Steakhouse, declined 5.4% at Olive Garden, declined 8.8% at Red Lobster and declined 0.7% at the Specialty Restaurant Group.

Darden's Board declared a quarterly cash dividend of $0.55 per share on the Company's outstanding common stock. The dividend is payable on May 5, 2014 to shareholders of record at the close of business on April 10, 2014.

The company affirmed its current projection for net earnings per share for fiscal year 2014 to decline between 15% and 20% compared to fiscal year 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 annual earnings per share of $2.47.

These expectations reflect the Company's projection that U.S. same-restaurant sales results for the full fiscal year will be -5.5% to -6.5% for Red Lobster, -2.5% to -3.5% for Olive Garden and +2.0% to +3.0% for LongHorn Steakhouse.