Darden Restaurants, Inc. (DRI) reported Friday a profit for the first quarter that increased from last year. The result reflects improved performance of Specialty Restaurant Group and Longhorn Steakhouse.
Earnings per share topped analysts' expectations by a penny, while quarterly revenues matched their estimates. The company also reaffirmed its earnings and revenue growth guidance for the full-year 2013, and declared a quarterly cash dividend.
Olive Garden sales grew 4.3 percent to $922 million, while U.S. same-restaurant sales edged up 0.3 percent. Red Lobster's sales totaled $660 million, down 2.1 percent, with U.S. same-restaurant sales also declining 2.6 percent.
Longhorn Steakhouse's sales increased 12.7 percent to $285 million, with U.S. same-restaurant sales also growing 3.6 percent. The Specialty Restaurant Group's sales rose 26.4 percent to $163 million, with same-restaurant sales growing 2.2 percent.
Total sales from continuing operations for the quarter grew 4.8 percent to $2.03 billion from $1.94 billion in the same quarter last year, and met twenty-four Wall Street analysts' consensus estimate of $2.03 billion.
The increase in sales is primarily attributable to contribution from the 11 Eddie V's restaurants acquired in November 2011, and the addition and operation of another 92 net new restaurants.
The Orlando, Florida-based full service restaurants operator reported net earnings from continuing operations of $110.8 million or $0.85 per share for the first quarter, higher than $106.6 million or $0.78 per share in the prior-year quarter.
On average, 29 analysts polled by Thomson Reuters expected the company to report earnings of $0.84 per share for the first quarter. Analysts' estimates typically exclude special items.
The company noted that it benefited from a year-over-year decline in seafood costs, which offset the spike in the cost of beef.
Earnings for the latest quarter included $0.01 per share of negative impact of costs associated with the acquisition of Yard House USA, Inc., which was acquired on August 29, 2012 from private equity firm TSG Consumer Partners LLC for $585 million in cash.
The company also declared a quarterly cash dividend of $0.50 per share on its outstanding common stock, payable on November 1 to shareholders of record at the close of business on October 10, 2012.
Looking ahead to fiscal 2013, Darden said it continues to expect net earnings per share from continuing operations to grow in a range of 5 to 9 percent over fiscal 2012, on projected sales growth of 9 to 10 percent. Street is currently looking for full-year 2013 earnings of $3.84 per share on revenues of $8.74 billion.
The forecast includes the sales and earnings impact of its August 2012 acquisition of Yard House. It also includes $0.07 to $0.10 per share of acquisition-related costs and purchase accounting adjustments.
Additionally, the results will also reflect the projected opening of about 100 to 110 net new restaurants in fiscal 2013, and the expected combined U.S. same-restaurant sales growth for Red Lobster, Olive Garden and LongHorn Steakhouse of about 1 to 2 percent in fiscal 2013.
DRI closed Friday's regular trading session at $54.72, down $0.28 on a volume of 2.27 million shares, higher than the three-month average volume of 1.50 million shares. In the past 52-week period, the stock has been trading in a range of $40.69 to $55.84.
by RTT Staff Writer
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