Darden Restaurants Reports Decline in YOY Results; Affirms Previous Guidance for Fiscal Year 2014

Darden Restaurants DRI released its fiscal third-quarter results before the opening bell Friday morning. The company reported diluted earnings per share, total sales and net earnings from continuing from operations, and same-restaurant-sales, all of which were lower than the same quarter last year. For the third quarter, the company reported net earnings from continuing operations of $109.5 million compared to $134.5 million, a decline of 18.6 percent. In addition, the company reported a decline of 1.1 percent in total sales from continuing operations when compared to the same quarter last year. Looking to earnings per share, Darden reported a diluted EPS of $0.82 down 19.6 percent from the previous year's diluted EPS of $1.02. The company reported that diluted EPS was hampered by two factors:

1. Lower sales and higher costs associated with severe weather this winter
2. Advisory, legal, and other cost related to the implementation of the strategic action plan announced in 2013

With a final look at diluted EPS, the company affirmed its guidance of a 15 - 20 percent decline for fiscal year 2014 when compared to 2013. Despite the year-over-year decline in third-quarter results, Darden's board of directors declared a $0.55 quarterly dividend. The company also provided results for each individual restaurants performance. Olive Garden Olive Garden reported $929 million of sales for the quarter, a 3.4 percent decline from the prior year. In addition, same-restaurant sales were down 5.4 and were partially offset by the opening of 18 new locations. Red Lobster Red Lobster reported sales of $611 million for the quarter, an 8.7 percent decline from the prior year. Red Lobster also experienced a decline in same-restaurant sales of 8.8 percent partially offset by one net new location. Longhorn Steak House In contrast, Longhorn Steak House reported $363 million in sales for the quarter, a increase of 9.1 percent compared to the prior year. This is due to the combination of 37 net new locations and a same-restaurant increase of 0.3 percent. Specialty Restaurant Group For the third quarter the Specialty Restaurant Group reported the best performance with $320 million in sales, an 11.6 percent increase from the previous year. This sales increase was driven by an increase in same-restaurant sales of .08 percent at Bahama Breeze and a 0.1 percent increase at Capital Grille. In contrast, Yard House, Eddie V's, and Seasons 52 had respective same-restaurant sales declines of 0.1, 2.9, and 4.4 percent. This quarter's increase in sales was also affected by 26 net new locations (five Capital Grille, four Bahama Breeze, ten Seasons 52, two at Eddie V's, and five Yard House).