Darden Restaurants: 14% increase in third quarter diluted net earnings per share

Mar 25, 2011 Industry News
Industry News

Darden Restaurants has announced a 14% increase in its third quarter diluted net earnings per share.

Highlights for the third quarter include the following:

  • Net earnings from continuing operations for the third quarter were $151.7 million, or $1.08 per diluted share, on sales of $1.98 billion. Last year, third quarter net earnings from continuing operations were $134.8 million, or 95 cents per diluted share, on sales of $1.87 billion.
  • Total third quarter sales from continuing operations of $1.98 billion represent a 5.5% increase over the prior year and reflects the company’s operation of 66 net new restaurants compared to prior year, 0.9% blended U.S. same-restaurant sales growth for Olive Garden, Red Lobster and LongHorn Steakhouse and strong same-restaurant sales growth for Darden’s Specialty Restaurant Group.
  • The 0.9% blended U.S. same-restaurant sales growth for the company’s three large full-service brands for the quarter compares to an estimated 0.1% increase in the Knapp-Track benchmark for U.S. casual dining same-restaurant sales, excluding Darden. Among the company’s large full-service brands, U.S. same-restaurant sales for the third quarter were flat at Olive Garden, up 0.1% at Red Lobster and up 6.1% at LongHorn Steakhouse.

“The casual dining industry’s same-restaurant sales results this quarter, despite severe winter weather for much of the period, is further evidence that economic conditions continue to improve,” says Clarence Otis, the company’s chairman and CEO.

“And we’re pleased we were able to leverage the better environment to once again produce strong earnings growth. Even with the economic improvement we’re seeing, it’s important to have product news that’s highly relevant given today’s still more fragile than normal emotional and financial circumstances.

“The final month of the quarter, Olive Garden’s promotion was not as effective as we’d hoped while we enjoyed much stronger than anticipated promotional effectiveness at both Red Lobster and LongHorn Steakhouse.

“Looking ahead, we’re confident in our promotional and other strategies and that we’re well positioned to continue to grow market share and deliver competitively superior earnings growth.”

Operating Highlights:

Olive Garden

Olive Garden’sthird quarter sales of $907 million were 4.3% above the prior year, driven by revenue from 33 net new restaurants. For the quarter, on a percentage of sales basis, lower restaurant labor expenses and restaurant expenses were partially offset by increased food and beverage expenses, selling, general and administrative expenses and depreciation expenses. The net result was an increase in operating profit and operating profit as a percentage of sales for the quarter.

Red Lobster

Red Lobster’s third quarter sales of $663 million were 1.2% higher than the prior year, driven by revenue from two net new restaurants and a U.S. same-restaurant sales increase of 0.1%. For the quarter, on a percentage of sales basis, lower restaurant labor expenses and restaurant expenses were partially offset by increased food and beverage expenses, selling, general and administrative expenses and depreciation expenses. The net result was an increase in operating profit and operating profit as a percentage of sales for the quarter.

Longhorn Steakhouse

Longhorn Steakhouse’s third quarter sales of $268 million were 12.6% above the prior year, driven by revenue from 21 net new restaurants and its same-restaurant sales increase of 6.1%. For the quarter, on a percentage of sales basis, lower food and beverage expenses, restaurant labor expenses and depreciation expenses were partially offset by increased selling, general and administrative expenses, resulting in an increase in operating profit and operating profit as a percentage of sales for the quarter.

The Specialty Restaurant Group

The Specialty Restaurant Group’s third quarter sales of $139 million were 25.0% above prior year, driven by same-restaurant sales increases of 8.4% at The Capital Grille, 3.4% at Bahama Breeze and 4.2% at Seasons 52. Additionally, sales growth reflected revenue from four new restaurants at The Capital Grille, one new restaurant at Bahama Breeze and six new restaurants at Seasons 52.

News and information presented in this release has not been corroborated by FSR, Food News Media, or Journalistic, Inc.