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Darden Restaurants, Inc. (DRI) Misses Q2 EPS by 6c

December 19, 2013 7:07 AM EST
Darden Restaurants, Inc. (NYSE: DRI) reported Q2 EPS of $0.15, $0.06 worse than the analyst estimate of $0.21. Revenue for the quarter came in at $2.05 billion versus the consensus estimate of $2.07 billion.

In the second quarter, U.S. same-restaurant sales increased 5.0% at LongHorn Steakhouse, declined 0.6% at Olive Garden and declined 4.5% at Red Lobster. The Company estimates that a shift in the Thanksgiving holiday week favorably affected second quarter same-restaurants sales by approximately 90 basis points at its large brands. The Thanksgiving holiday week, traditionally a low sales period, was in the Company's fiscal second quarter last year but shifted to its fiscal third quarter this year.

FY14 Outlook:

Darden currently expects diluted net earnings per share for fiscal year 2014 to decline between 15% and 20% compared to fiscal 2013. These expectations reflect the Company's projection that combined U.S. same-restaurant sales growth for Red Lobster, Olive Garden and LongHorn Steakhouse this fiscal year will be -1% to -2%. This is below the 0% to 2% the Company anticipated previously, with the change in expectations due largely to a meaningful downward adjustment in the forecast of same-restaurant sales results at Red Lobster. The Company believes the adjustment is appropriate given Red Lobster's first and second quarter results and the potential effect of efforts during the second half of the year to complete the spin-off of the brand. Current earnings expectations for the year also reflect the opening of approximately 75 net new restaurants, five fewer restaurants than previously anticipated, the net impact of the September support expense reduction efforts, as well as the legal, financial advisory and other costs incurred in the second quarter in connection with the Company's strategic review and related actions. The earnings forecast for fiscal year 2014 does not include costs the Company is likely to incur in the third and fourth quarters in connection with the separation of Red Lobster and other strategic actions announced today.

For earnings history and earnings-related data on Darden Restaurants, Inc. (DRI) click here.


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