5. Darden's Dumb Excuse
If Darden's (DRI) CEO thinks the press is out to get him over his Obamacare cutbacks, then, to borrow a phrase from Animal House, "Wait till Otis sees us!"
Shares of the restaurant company sank more than 10% on Tuesday after head honcho Clarence Otis lowered financial expectations for both Darden's fiscal second quarter and full year, citing a drop in business at its Olive Garden, Red Lobster and LongHorn Steakhouse chains. For its 2013 fiscal year, Darden said it expected earnings of $3.29 to $3.49 per share, significantly down from the company's earlier guidance of $3.76 to $3.90. Prior to Darden's preannouncement, Wall Street's consensus 2013 estimate was $3.88.
What's behind the dreary forecast? A lot of things, according to Otis, including promotions that did not "resonate with financially stretched consumers," Hurricane Sandy hitting East coast locations and the purchase of Yard House restaurants.To be honest, had Otis stopped there, we would have let him slide. Darden's been such a serial outperformer over the past decade that we would have been perfectly willing to overlook even a massive earnings whiff like this one. But then, like Brother Bluto in the Faber College cafeteria, he started a food fight, taking aim squarely at overeducated, underpaid ink-stained wretches like us. And, as a result, we just had to respond. Otis proceeded to blame the company's less-than-stellar results and cautious outlook on "negative media coverage that focused on Darden ... and how we might accommodate health-care reform." Negative media coverage? Come on, Clarence, get some clarity. We remember the hullabaloo this past fall when you tested plans to put more workers on part-time schedules to lessen the impact of the president's health-care plan. And we understand it's a serious issue for a chain that has more than 2,000 restaurants and 185,000 employees. Nevertheless, you can't pin your Obamacare problems on us! We didn't keep people from eating at your restaurants. It's the Olive Garden's menu, not a muckraking media that's your biggest problem. On a positive note, at least Otis didn't blame the fiscal cliff for his company's woes like Pandora's (P) CEO did this week. If that guy really believes that the government's budget squabbles are keeping kids from listening to Taylor Swift on his online radio station, then he's not too swift himself. Or, as the boys in Delta House might say, he's one Shama Lama Ding Dong!
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