Darden Restaurants Announces Expected First Quarter Diluted Net Earnings Per Share

Darden Restaurants, Inc. (NYSE: DRI) today reported that it expects diluted net earnings per share from continuing operations for its fiscal first quarter ended August 28, 2011 to be approximately 78 cents.  The Company also reported that, for the first quarter, Red Lobster, Olive Garden and LongHorn Steakhouse's combined U.S. same-restaurant sales are expected to increase +2.8% versus the prior year and the Specialty Restaurant Group's combined same-restaurant sales are expected to increase +5.1% versus the prior year.  Preliminary first quarter U.S. same-restaurant sales results at Red Lobster, LongHorn Steakhouse and Olive Garden are +10.7%, +4.8% and -2.9%, respectively.  

The Company estimates that Hurricane Irene adversely impacted diluted net earnings per share from continuing operations for its fiscal first quarter by approximately two cents.  Hurricane Irene also adversely affected same-restaurant sales results for the quarter for Red Lobster, Olive Garden and LongHorn Steakhouse by approximately 80 basis points in August and 20 to 30 basis points in the first quarter.  Darden expects to release its fiscal 2012 first quarter earnings on Wednesday, September 28, 2011, before the market opens.

Darden announced that it now expects combined full-year U.S. same-restaurant sales growth in fiscal 2012 of approximately +3% for Red Lobster, Olive Garden and LongHorn Steakhouse, and that it continues to expect to open approximately 80 to 90 net new restaurants in fiscal 2012.  As a result, the Company expects total sales growth of between 6.5% and 7.5% in fiscal 2012. In addition, the Company announced that it now anticipates that diluted net earnings per share growth from continuing operations in fiscal 2012 will be towards the lower end of its previously announced range of 12% and 15%.

The Company also announced a higher share repurchase target for fiscal 2012. Darden now expects to repurchase between $450 million and $500 million of its common stock during the year, which compares to a previously announced target of $350 million to $400 million.  

"We had very strong sales results this quarter at Red Lobster, LongHorn Steakhouse and our Specialty Restaurant Group, although the results at Olive Garden were below our expectations," said Clarence Otis, Chairman and Chief Executive Officer of Darden.  "We are responding aggressively to Olive Garden's sales opportunity, and we're confident in our plans for what continues to be one of our industry's strongest brands."  

"Also, as we indicated earlier, commodity cost comparisons for the first half of our fiscal year are challenging since historically high costs for the period this year are up against what were below normal costs the first half of last year.  This cost dynamic and the sales shortfall at Olive Garden put pressure on first quarter earnings growth despite the strong sales performance across the rest of the Company," Otis continued.  "The challenging prior year commodity cost comparison will continue into our second quarter and we expect diluted net earnings per share to be in-line with prior year.  However, commodity comparisons should be more neutral in the second half of the year.  With this change in year over year cost comparisons, plus progress addressing Olive Garden's business momentum, a continuation of the solid sales performance of our other brands and a meaningful increase in the number of shares we'll repurchase, we continue to anticipate diluted net earnings per share growth of +12% to +15% for the full fiscal year.  While it is still early in our year, given the overall business environment, at this point we have a higher confidence level in the lower end of the range."

higher confidence level in the lower end of the range."

Preliminary Fiscal 2012 June, July and August U.S. Same-Restaurant Sales Results

Darden reported preliminary U.S. same-restaurant sales for the fiscal months of June, July and August as follows:

* Note: Same-restaurant sales results in August were adversely affected by approximately 80 basis points due to Hurricane Irene which caused 151 days of restaurant closures.  

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