Multi-conceptual restaurant chain Darden Restaurants (DRI) said Thursday morning that fiscal 2013 second-quarter profit decreased 37 percent to $33.7 million, or 26 cents per share, from $54.1 million, or 40 cents per share, in the second quarter last year. Sales increased 7 percent in the latest second quarter to $1.96 billion from $1.83 billion in the year prior quarter. The earnings report was in line with Reuters’ analyst expectations of 26 cents per share in profit and $1.95 billion in sales.
The restaurant operator reported that same-store sales (sales at locations open at least one year) at its flagship Red Lobster, Longhorn Steakhouse and Olive Garden operations declined 2.7 percent in the recent quarter compared to the year earlier quarter. Those decreases were offset by same-restaurant sales increase of 0.7 percent for its Specialty Restaurant Group, incremental sales from the 11 Eddie V's restaurants acquired on November 14, 2011, the acquisition of 40 Yard House restaurants on August 29, 2012 and the addition and operation of another 99 net new restaurants compared to the second quarter last year.
Orlando, Florida-based Darden’s Specialty Restaurant Group includes Yard House, The Capital Grille, Bahama Breeze, Seasons 52 and Eddie V’s. Thanks to acquisitions and new locations, sales for this collection of restaurants jumped 76.4 percent for Q2 last year to $241 million.
46 new Olive Garden restaurants helped boost total sales at that brand by 1.5 percent to $849 million; counterbalancing a 3.2 percent drop in same-store sales. Five new Red Lobsters pared a drop in sales of 2.1 percent to $590 million in Q2. Sales at Longhorn Steakhouse restaurants rose 7.8 percent to $275 million, driven largely by 32 new restaurants that offset a 0.8 percent decline in same-store sales.
The acquisition of Yard House USA, Inc. in August hurt adjusted earnings per share by about a nickel, according to the company. Hurricane Sandy blasting the East Coast late in October adversely affected same-store-sales by approximately 60 basis points in November and 20 basis points for the full quarter. The superstorm caused nearly 500 days of restaurant closures.
Darden's Board of Directors declared a quarterly cash dividend of 50 cents per common share payable on February 1, 2013 to shareholders of record at the close of business on January 10, 2013.
Looking forward, Darden affirmed its financial outlook for fiscal 2013. The company expects total sales growth of 7.5% - 8.5%. Darden guides diluted net earnings per share from continuing operations of $3.29 to $3.49 for fiscal 2013, which includes approximately 8 to 10 cents of transaction and closing costs associated with the purchase of Yard House USA, Inc. The corporate estimates are in line with Wall Street expectations of earnings of $3.39 per share for the full year.
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