Darden Restaurants Lifts Q1 Outlook, Announces New Director Nominees

(RTTNews) - Darden Restaurants Inc. (DRI) on Tuesday raised its earnings outlook for the first quarter of fiscal 2015 and reaffirmed its outlook for the full-year. The company noted that the anticipated results show improved guest satisfaction, sales and traffic trends at Olive Garden as a result of its brand renaissance plan.

In a separate statement, Darden announced new director nominees for the 2014 annual meeting of shareholders under a reconstituted board. The company, which is engaged in a proxy battle with activist investors, noted that eight of its twelve independent directors would be new to the board. Four seats will be filled by candidates proposed by activist shareholder Starboard Value L.P. and its affiliates.

Gene Lee, President and Chief Operating Officer of Darden Restaurants said, "While we are pleased with our continued success at LongHorn and at our Specialty Restaurant brands, we are especially pleased with the progress we are making at Olive Garden. Improved same-restaurant sales and traffic trends indicate that the actions we are taking are continuing to get traction with consumers."

For the first quarter, the Orlando, Florida-based full-service restaurants operator now forecasts loss per share from continuing operations of about $0.13 to $0.15 per share, and adjusted earnings per share from continuing operations of $0.31 to $0.33 per share.

Earlier, the company forecast first-quarter loss per share from continuing operations in a range of $0.16 to $0.18 per share, and adjusted earnings per share from continuing operations of $0.28 to $0.30 per share.

On average, eighteen analysts polled by Thomson Reuters expect the company to report earnings of $0.30 per share for the first quarter. Analysts' estimates typically exclude special items.

The company anticipates U.S. same-restaurant sales for the first quarter to be about +2.8 percent for LongHorn Steakhouse, -1.3 percent for Olive Garden, and +2.1 percent for its Specialty Restaurant Group.

Darden Restaurants said it was seeing improvement in base traffic trends at Olive Garden following the introduction of a comprehensive new menu in late February.

The company noted that the improvement in Olive Garden's same-restaurant results for August was particularly encouraging since August of 2013 included three weeks of a proven guest-driving promotion - Never Ending Pasta Bowl - that was not repeated this period as this promotion has moved to late September.

For fiscal 2015, Darden Restaurants reaffirmed its outlook for net earnings per share from continuing operations of $1.81 to $1.90, and adjusted earnings per share from continuing operations of $2.22 to $2.30. Street expects the company to report earnings of $2.22 per share for the year.

The outlook reflects the company's projection that U.S. same-restaurant sales growth for fiscal 2015 for Olive Garden, LongHorn Steakhouse and the Specialty Restaurant Group will be flat to +1 percent, +1 to +2 percent, and about +2 percent, respectively.

Darden expects to release sales and earnings results for the first quarter on Friday, September 12, 2014, before the market opens.

In a separate statement, Darden announced a new slate of nominees for election to the company's board of directors at the 2014 annual meeting of shareholder that is scheduled for October 10, 2014.

The company noted that the new slate reflects the board's commitment to serving the best interest of all Darden shareholders.

Darden's slate and proposed board structure would provide for four new independent nominees unaffiliated with the company or Starboard, four returning independent director nominees, and four seats to be filled by candidates proposed by activist shareholder Starboard Value L.P. and its affiliates.

Starboard Value has sought to replace the company's entire board. The activist investor said in April that Darden's plan to spin off the Red Lobster chain was the wrong spin-off, at the wrong time, and for the wrong reasons.

Another investment firm Barington Capital Group L.P. had earlier urged the independent directors of Darden to replace Chairman and Chief Executive Officer Clarence Otis, while objecting to spin-off plans for the Red Lobster chain.

Darden noted that the four new independent nominees are all current or former chief executive officers. They are Gregory Burns, Jeffrey Fox, Steve Odland and Enrique Silva. The company's four nominees include Michael Barnes, Christopher Fraleigh, Michael Rose, Maris Sastre.

Darden Restaurants noted that Leonard Berry, Victoria Harker, Charles Ledsinger, William Lewis and William Simon will be not be standing for re-election at the 2014 annual meeting.

DRI is trading at $48.65, up $1.33 or 2.81 percent on a volume of 337,340 shares.