Darden Restaurants profit up
LOS ANGELES (Reuters) - Darden Restaurants Inc (DRI.N), parent of the Olive Garden and Red Lobster restaurant chains, posted a higher net profit on Tuesday, boosted by its recently acquired LongHorn Steakhouse and Capital Grille chains.
The company reported a mixed bag of sales figures. U.S. same-store sales, a key gauge of restaurant performance, rose 5.7 percent at Olive Garden but fell 2 percent and 3.3 percent at Red Lobster and LongHorn Steakhouse, respectively.
Severe weather reduced each of those results by approximately 1 percentage point, Darden said.
Net income in the third quarter rose 18 percent to $126 million, or 88 cents per share, from $106.4 million, or 72 cents per share, a year earlier.
Excluding estimated integration costs and purchase accounting adjustments, earnings were 85 cents, a penny above what analysts on average were expecting, according to Reuters Estimates.
Total sales from continuing operations rose 25 percent to $1.81 billion, including $292.0 million from LongHorn Steakhouse and The Capital Grille. Wall Street, on average, was expecting sales of $1.80 billion.
Olive Garden sales rose 11 percent to $802.8 million while sales at Red Lobster fell 1.8 percent to $671.7 million.
Darden completed its roughly $1.2 billion acquisition of RARE Hospitality International Inc, owner of LongHorn Steakhouse and Capital Grille, during the fiscal second quarter.
Looking to fiscal 2008, Darden said it continues to expect that net earnings from continuing operations will rise 2 to 4 percent, including transaction and integration-related costs associated with the acquisition. It first provided that estimate last month.
Excluding those costs, net earnings from continuing operations are expected to rise between 7 to 9 percent in the fiscal year.
Analysts, on average, are expecting fiscal 2008 earnings per share of $2.72, which represents an 8 percent rise over the prior year.
Same-store sales growth for 2008 is expected to rise between 2 and 3 percent for Red Lobster, Olive Garden and LongHorn Steakhouse.
In December, Darden had expected same-store sales growth of 2 to 4 percent.
The company slightly reduced its new store opening target from 65 stores to 60 new stores this year, including at its new chains.
Several full-service restaurants have struggled over the past year as consumers cut back on meals outside the home amid higher food and fuel costs and a weak housing market. Higher prices on commodities like milk and wheat have also hit restaurant companies.
Shares of Darden closed on the New York Stock Exchange at $29.86, up 40 cents, or over 1 percent.
(Reporting by Alexandria Sage; editing by Carol Bishopric)
