ORLANDO Fla. Darden Restaurants Inc. posted a net loss of $55.1 million for the quarter ended May 27 because of a $245 million pre-tax charge for the discontinuation of its Smokey Bones business and the closing of nine Bahama Breezes.
Revenues from continuing operations rose 3.2 percent for the fourth quarter to $1.46 billion, and grew 4 percent for the year to $5.57 billion. The revenue rise reflected Olive Garden's 51st consecutive quarterly increase in same-store sales, of 3.5 percent, and its 2.7-percent same-store rise for the full year, the company said.
Annual same-store sales also rose at Red Lobster and Bahama Breeze.
But full-year net profit was down 40 percent to $201.4 million, primarily because of Smokey Bones. Darden shuttered 56 of the division's restaurants on May 5 and put the remaining 73 units up for sale.
Last year the industry's largest casual-dining operator had fourth-quarter earnings of $92.3 million, or 60 cents per share.
"We had competitively superior financial results from continuing operations this year in what was clearly a difficult environment for our industry," Darden chairman and chief executive Clarence Otis said.
Management said Wednesday in a conference call with analysts today that it plans to restart expansion of Bahama Breeze. Darden's youngest concept, the all-fresh-ingredient Seasons 52, is averaging $6.4 million in unit volumes, the company said, adding that no openings of the brand are planned for fiscal 2008.
Afocus on costs has protected Darden's top line, the company is continuing to benefit from its supply-chain management, strong IT investments and organizational discipline.
"We want to focus on decreasing waste while not negatively impacting our guest or employee experience. That is an ongoing discipline," said Drew Madsen, president and chief operating officer of Darden.
Darden said it anticipates a continued inflationary environment due to rising corn and soybean costs, and has contracted to buy a significant portion of its commodities for the current fiscal year at or slightly above the levels paid during fiscal 2007.
"We are confident that we are working on the right things at all of our brands," Otis said. "We are investing in their continued growth and development and think we are well positioned entering 2008 and anticipate strong financial performance in the year."
Still, results have been impacted by negative same-store sales at Red Lobster, the company's biggest business unit. Same-store sales for the fourth quarter were down year-over-year by 2.2 percent.
It said that Florida and California have been weak markets for casual dining because of declining real estate prices and the immense number of floating-rate mortgages that are now coming up for adjustment.
Going forward, management said it expects combined same-restaurant sales growth in fiscal 2008 of between 2 and 4 percent for Red Lobster and Olive Garden. Additionally, it said it expects approximately 3 percent unit growth in fiscal 2008, mostly from Olive Garden. Arden said it believes North America can ultimately support 800 to 900 of the Italian restaurants.
Darden presently operates 582 Olive Gardens, 682 Red Lobsters, 23 Bahama Breezes and five Season 52 outlets.
