Darden Restaurants, Inc. (DRI: Quote) on Friday reaffirmed its earnings growth guidance for both the fourth quarter and fiscal-year 2012 after reporting better-than-expected results for the third quarter, boosted by higher same-restaurant sales.
The full-service restaurant company's Chairman and Chief Executive Officer Clarence Otis stated, "With our sales strength and deceleration in year-over-year food cost inflation, we were able to generate solid earnings growth even though food cost inflation remained elevated on an absolute basis."
The company that owns and operates more than 1,900 restaurants said its third-quarter net earnings grew 8.5 percent to $164.1 million from $151.2 million last year. Earnings per share rose 16 percent to $1.25 and topped analysts' estimates.
On average, 33 analysts polled by Thomson Reuters expected the company to earn $1.24 per share. Analysts' estimates typically exclude special items.
Sales for the quarter grew 9.3 percent to $2.16 billion, beating analysts' estimate of $2.14 billion.
According to the company, the increase in sales mainly reflected combined same-restaurant sales growth of 4.1 percent for Red Lobster, Olive Garden and LongHorn Steakhouse. This exceeds an estimated 2.6 percent increase for the Knapp-Track benchmark of U.S. same-restaurant sales excluding Darden, it said.
"--we achieved strong sales growth this quarter across all of our brands. And while favorable weather certainly helped, each had excellent or improving underlying business strength," Otis added.
Same-restaurant sales growth of 5.8 percent in the company's Specialty Restaurant Group and the addition of 11 Eddie V's restaurants and operation of another 80 net new restaurants also boosted the quarterly results.
Further, Darden's Board of Directors declared a quarterly cash dividend of $0.43 per share, payable on May 1 to shareholders of record on April 10.
Looking ahead, Darden backed its forecast of 4 to 7 percent increase in fiscal 2012 net earnings per share from continuing operations. The company also expects total sales growth of between 7 and 7.5 percent.
The forecast reflects its continued expectation for combined U.S. same-restaurant sales growth of approximately 2.5 to 3 percent for Red Lobster, Olive Garden and LongHorn Steakhouse for the full year as well as the planned opening of about 85 to 90 net new restaurants.
Otis noted, "With its continuing improvement, solid momentum at our other brands and moderating food cost inflation, we continue to anticipate strong earnings growth in the fourth quarter and remain excited about what we can achieve next year and beyond."
In pre-market activity, Darden shares are edging up $0.17 or 0.33 percent and currently trading at $52.
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by RTT Staff Writer
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