* Sees fiscal Q3 EPS $1.23-$1.25 vs Street view $1.19
* Mild winter, early Lent boosting results
By Lisa Baertlein
Feb 23 (Reuters) - Darden Restaurants Inc forecast quarterly profit above Wall Street expectations and said its Olive Garden chain, which contributes almost half of company revenue, would reverse more than a year of same-restaurant sales declines.
The Orlando-based company, which also operates the Red Lobster and LongHorn Steakhouse chains, said mild winter weather and an earlier Lenten season buoyed results for its fiscal third quarter that ends Feb. 26.
Investors were unmoved, since weather is beyond Darden’s control and rising gasoline prices threaten to ruin diners’ appetite for meals away from home. Darden shares were down 12 cents to $50.00 in afternoon trading.
The Christian season of Lent landed in Darden’s third quarter this year but was in its fourth quarter a year earlier.
Darden’s Red Lobster seafood chain schedules its LobsterFest specials during the Lenten season, when some Christians avoid meat, and expects to benefit from the calendar shift.
The company forcast third-quarter earnings of $1.23 to $1.25 a share from continuing operations, above analysts’ average forecast of $1.19, according to Thomson Reuters I/B/E/S.
Darden said it expects a 2 percent sales rise in the third quarter at Olive Garden restaurants open at least 16 months. It has not reported a quarterly rise in Olive Garden same-store sales since the quarter ended Nov. 28, 2010.
Since then, Darden has reworked menus and increased promotions to bolster traffic and spending at the Italian-themed chain.
Bernstein Research analyst Sara Senatore said the company did not convincingly demonstrate a clear turnaround in brand health at Olive Garden, particularly in light of a substantial step-up in promotional intensity.
“Darden remains under pressure to show that it is capable of executing a sustained course correction for its most important concept,” Senatore said in a note to clients.
Darden, due to report third-quarter results on March 23, repeated its forecast for full-year earnings per share growth of 4 percent to 7 percent.