Darden Restaurants Disappoints

It swings to a loss on closings.
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Darden Restaurants (DRI) - Get Report swung to a fourth-quarter loss on costs from underperforming divisions, while its operating profit missed analysts' expectations.

The chain operator said Tuesday that it lost $55.1 million, or 38 cents a share, compared with a profit of $92.3 million, or 60 cents a share, a year earlier.

Darden's results in the latest fourth quarter included a pretax charge of about $245 million comprising a noncash asset impairment charge for 129 restaurants and other costs related to the closing of 65 restaurants.

Last month, Darden closed 54 of its Smokey Bones restaurants and two Rocky River Grillhouse restaurants and announced it would sell the remaining 73 Smokey Bones restaurants. The company also closed nine Bahama Breeze restaurants on April 28.

Excluding the losses from discontinued operations, Darden earned $98.5 million, or 67 cents a share.

On that basis, analysts were expecting 70 cents a share.

Sales rose to $1.46 billion from $1.41 billion, also missing analysts' estimate of $1.56 billion.

Shares of Darden fell $2.15, or 4.6%, to $44.70 in recent after-hours trading.

Darden said fourth-quarter same-store U.S. sales at its Olive Garden chain rose 3.5%, and Red Lobster fell 2.2%.

In the third quarter, Darden said Olive Garden same-store sales rose 1%, while Red Lobster rose 4.6%.

For fiscal 2008, Darden said it expected growth of 10% to 12% in earnings per share from continuing operations, suggesting a range of $2.78 to $2.83 a share. Analysts were expecting $2.73 a share.

Darden expects combined same-restaurant sales growth in fiscal 2008 of between 2% and 4% for Red Lobster and Olive Garden. The company also expects about 3% unit growth in fiscal 2008, comprising mainly Olive Garden restaurants.