ORLANDO Fla. Darden Restaurants Inc., one of the nation’s largest casual-dining operators, joined its segment competitors in reporting negative same-store sales at each of its five major brands for its latest quarter, and blamed the difficult consumer environment, bad weather and an unfavorable calendar shift.
The weak sales, along with integration costs from the company’s 2007 acquisition of Rare Hospitality and losses from discontinued operations, led to a nearly 15-percent drop in net earnings for the company’s fiscal third quarter ended Feb. 22.
Domestic same-store sales fell 1.4 percent at Olive Garden, 4.6 percent at Red Lobster, 5.4 percent at LongHorn Steakhouse, 19.0 percent at The Capital Grille and 8.8 percent at Bahama Breeze.
Until this latest quarter, Darden’s Olive Garden and Red Lobster, along with Buffalo Wild Wings, were the only three casual-dining brands tracked by Nation’s Restaurants News that had posted positive same-store sales. The average same-store sales decline, based on all casual-dining brands owned by public restaurant companies, was 7 percent for the latest quarter, according to NRN research.
For Darden, December was by far the quarter’s worst month, with double-digit same-store sales decreases at LongHorn and Red Lobster. The company said that the inclusion of the Thanksgiving holiday week into this year’s fiscal third quarter hurt sales, as did severe winter weather.
Darden’s third-quarter net earnings totaled $107.5 million, or 78 cents per share, compared with net earnings of $126.0 million, or 88 cents per share, in the same quarter a year earlier.
Latest-quarter revenue fell 0.7 percent to $1.80 billion.
The results still beat Wall Street expectations, and Darden boosted its full-year sales and profit guidance. The company now expects earnings from continuing operations to rise between 1 percent and 4 percent on revenue growth of between 9 percent and 9.5 percent. Earlier this year, Darden had projected an earnings decline.
Contact Sarah Lockyer at [email protected].
