This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Darden's Earnings Fall; Stock Follows

NEW YORK (TheStreet) -- Fewer consumers were shopping at malls this summer and it seems that fewer customers were eating at full-service restaurants like Olive Garden and Red Lobster.

Darden Restaurants (DRI - Get Report), the restaurants' parent company, reported disappointing fiscal first-quarter earnings, fueled by lower same-restaurant sales at its two largest concepts.

Darden reported Friday net income from continuing operations fell 37% to $70.3 million, or 53 cents a share. Estimates were calling for earnings of 70 cents a share from the Orlando-based company, according to Yahoo! Finance.

Darden's first quarter ended on Aug. 25.

Must Read: [video] Activist Investor Buys 8% Stake in Aeropostale

Shares were falling 3.5% to $47.57 soon after the market opened Friday.

Sales rose 6.1% to $2.03 billion from the year-earlier period but they were softer than analysts' expectations of $2.2 billion. Darden blamed a 3.3% decline in same-store restaurant sales from Olive Garden, Red Lobster and LongHorn Steakhouse compared to last year.

In addition to its three largest brands, Darden's Specialty Restaurant Group owns concepts such as The Capital Grille, Bahama Breeze, Eddie V's and Yard House.

The company said it plans to reduce annual spending by about $50 million through work force reductions and program spending cuts. For fiscal 2014, the actions will reduce spending by $25 million, offset this year by $10 million in upfront costs related to implementing the plan.

Darden also announced that is Chief Operating Officer Drew Madsen will retire in November, following the company's second quarter. Madsen will be succeeded, effective immediately, by Gene Lee, who currently serves as president of Darden's Specialty Restaurant Group.

Darden said it continues to expect diluted net earnings for the year to decline between 3% and 5%.

"Following our industry's pronounced spikes up and down in same-restaurant sales last winter and spring, the results this summer are further evidence that we can expect sharper sales volatility as the slow and uneven recovery in the economy persists," Chairman and CEO Clarence Otis said in the earnings statement.

The company saw improvement in restaurant sales in August.

"Still, like the rest of the quarter, August was a challenging month on an absolute basis and we have to be prepared for consumers to continue to be cautious in their spending," Otis said.

-- Written by Laurie Kulikowski in New York.

Disclosure: TheStreet's editorial policy prohibits staff editors, reporters and analysts from holding positions in any individual stocks.

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
DRI $63.61 0.00%
AAPL $93.64 0.00%
FB $118.57 0.00%
GOOG $698.21 0.00%
TSLA $241.80 0.00%


Chart of I:DJI
DOW 17,891.16 +117.52 0.66%
S&P 500 2,081.43 +16.13 0.78%
NASDAQ 4,817.5940 +42.2360 0.88%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs