* Sees fiscal Q3 EPS $1.23-$1.25 vs Street view $1.19
* Mild winter, early Lent boosting results
By Lisa Baertlein
Feb 23 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
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.