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Darden Restaurants (DRI) Misses Q4 EPS Views; Boosts Dividend; Guides FY14

June 21, 2013 7:01 AM EDT
(Updated - June 21, 2013 7:18 AM EDT)

Darden Restaurants, Inc. (NYSE: DRI) reported Q4 EPS of $1.02, versus the analyst estimate of $1.04. Revenue for the quarter came in at $2.3 billion versus the consensus estimate of $2.27 billion.

The increase reflects blended same-restaurant sales growth of 2.2 percent for Olive Garden, Red Lobster and LongHorn Steakhouse, same restaurant-sales growth of 2.3 percent for the Company's Specialty Restaurant Group, the addition of 44 Yard House restaurants (including the 40 restaurants that were acquired and four that were opened following acquisition) and the operation of another 100 net new restaurants compared to the fourth quarter last year.
  • Olive Garden sales rose 5.3 percent to $952 million;

  • Red Lobster sales improved 3.3 percent to $703 million;

  • Longhorn Steakhouse sales rose 14 percent to $339 million; and

  • Specialty Restaurant sales improved a staggering 64.7 percent to $295 million.

"Looking ahead, we expect a macroeconomic environment that is similar in fiscal 2014 to what it was in fiscal 2013, with slow and uneven recovery in both the overall economy and our industry," commented CEO Clarence Otis. "That means many guests will continue to need and expect us to emphasize affordability. At the same time, the generational, multicultural and other dynamics that are changing tastes and preferences in a host of areas, including what consumers want from restaurants, will continue. So, in addition to our work to ensure appropriate affordability, we will remain focused on reshaping the guest experiences we provide. With the steps we have already taken, the momentum we are seeing, our plans for building on that momentum and the best teams in the industry, we are confident we can sustain same-restaurant traffic growth."

Fiscal 2014 Outlook: "Since last year's sales and earnings results were well below our goals, incentive payouts for the year – 75 percent of which typically go to restaurant managers and multi-restaurant operations leaders – were well below normal. Accruing annual incentives at a normal level in fiscal 2014 following the well below normal payout in fiscal 2013 will adversely affect year-over-year earnings comparisons by approximately 35 cents per diluted share. Year-over-year earnings comparisons will also be adversely affected approximately six cents per diluted share by the projected costs associated with the next phase of implementation of the Affordable Care Act. And finally, these incremental incentive and health care expenses will be offset by approximately eight cents of lower year-over-year costs and purchase accounting adjustments related to the Yard House acquisition. Taking the net negative 33 cents associated with these factors into account, we expect diluted net earnings per share for fiscal 2014 to be below fiscal 2013 by 3 percent to 5 percent. Excluding the effect of these items would result in diluted net earnings per share growth of 4 percent to 6 percent. We expect total sales growth for fiscal 2014 to be between 6 percent and 8 percent including an additional quarter of sales this year from Yard House and between 5 percent and 7 percent excluding those sales," Otis concluded.

The company also declared at 55 cent quarterly dividend, up 10 percent from its prior rate of 55 cents.

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


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