Darden Restaurants Q4 Results Miss Estimates

(RTTNews) - Darden Restaurants, Inc. (DRI) reported Friday a profit for the fourth quarter that declined 35 percent from last year, despite improved sales, reflecting losses from discontinues operations and impairment charges. Both earnings per share and quarterly sales missed analysts' expectations.

The company also said it will provide fiscal 2015 financial outlook during the fourth quarter conference call later in the day.

The company agreed in mid-May to sell Red Lobster business and certain other related assets and assumed liabilities to San Francisco-based private equity investment firm Golden Gate Capital for $2.1 billion cash. The sale is expected to close in the first fiscal quarter of 2015.

Darden said it expects to receive net cash proceeds from the sale of Red Lobster, after tax and transaction costs, of about $1.6 billion, of which about $1.0 billion will be used to retire outstanding debt.

Darden has been looking to sell or spin-off its struggling seafood dining Red Lobster since December 2013. The first Red Lobster was opened in Lakeland, Florida in 1968.

As a result of the pending sale of Red Lobster, operating results for Red Lobster are included in discontinued operations for all period, the company noted.

The Orlando, Florida-based full service restaurants operator reported net earnings of $86.5 million or $0.65 per share for the fourth quarter, lower than $133.2 million or $1.01 per share in the prior-year quarter.

The company noted that results for the latest quarter is estimated to have been adversely affected by about $0.19 per share due to legal, financial advisory and other costs related to implementation of the strategic action plan Darden announced in December 2013 and charges related to various asset impairments.

Earnings from continuing operations for the quarter declined to $48.4 million or $0.36 per share from $78.5 million or $0.59 per share in the year-ago quarter.

On average, 24 analysts polled by Thomson Reuters expected the company to report earnings of $0.94 per share for the quarter. Analysts' estimates typically exclude special items. for the quarter

Total sales from continuing and discontinued operations edged up to $2.32 billion from $2.30 billion in the same quarter last year, but missed twenty Wall Street analysts' consensus estimate of $2.33 billion by a whisker.

Sales from continuing operations grew to $1.65 billion from $1.59 billion from last year. Under discontinued operations, Red Lobster's sales totaled $664 million, down 5.6 percent, with U.S. same-restaurant sales also declining 5.6 percent.

The company noted that the sales growth primarily reflects same restaurant-sales growth at the Specialty Restaurant Group, and LongHorn Steakhouse restaurant as well as the addition of 69 net new restaurants this year, partially offset by declines in same-restaurant sales for Olive Garden, and Red Lobster restaurants.

Olive Garden sales declined 2.7 percent to $926 million, and its U.S. same-restaurant sales were down 3.5 percent. Longhorn Steakhouse's sales improved 10.8 percent to $376 million, with U.S. same-restaurant sales also increasing 2.4 percent.

The Specialty Restaurant Group's sales grew 15.9 percent to $342 million, and U.S. same-restaurant sales grew 2.0 percent, with 4.0 percent growth at The Capital Grille, 4.1 percent at Bahama Breeze, 0.3 percent at Eddie V's, and 0.8 percent at Yard House, while being partially offset by a 1.6 percent decline at Seasons 52.

The company also declared a quarterly cash dividend of $0.55 per share on its outstanding common stock, payable on August 1 to shareholders of record at the close of business on July 10, 2014.

DRI closed Thursday's regular trading session at $49.52, down $0.37 on a volume of 1.45 million shares. In the past 52-week period, the stock has been trading in a range of $44.78 to $54.89.