Monday, January 26th1.4°C
24736
24277

Sales at Olive Garden, Red Lobster slide, and Darden's profit tumbles on charges

NEW YORK, N.Y. - Darden said Friday that sales continued to slide at Olive Garden and Red Lobster, with other costs dragging down its profit by 35 per cent in the latest quarter.

The results fell short of Wall Street expectations, and shares were down 2.5 per cent in midday trading.

Darden Restaurants Inc. has been fighting to stop declining sales at Olive Garden and Red Lobster. Such sit-down chains were hit hard by the downturn, which prompted many customers to trade down to cheaper options. The menus at Olive Garden and Red Lobster also failed to keep pace with changing tastes.

Despite ongoing efforts to fix the marketing for the chains, sales at Olive Garden fell 3.5 per cent at established locations during the quarter. At Red Lobster, the figure dropped 5.6 per cent.

Under pressure to deliver better results, Darden announced late last year that it planned to get rid of Red Lobster and focus on fixing Olive Garden. The company says that Olive Garden customers are more in line with those at its smaller, more successful chains, such as The Capital Grille and Yard House.

Darden says Red Lobster chains tend to be in lower income brackets.

To revitalize Olive Garden, executives say they plan to underscore the quality and freshness of the food, which they say are increasingly important traits for customers. They're also rolling out lighter dishes, and trying to boost the chain's lunchtime business.

So far in June, the company said Olive Garden's sales at established locations are flat, an improvement from the negative results over the past fiscal year.

"We're in the early stage of exposing guests to what we call a brand renaissance plan," said Eugene Lee, president of Darden.

For its fiscal fourth-quarter ended May 25, Darden earned $86.5 million, or 65 cents per share. A year earlier it earned $133.2 million, or $1.01 per share.

Stripping out one-time charges, such as those associated with the sale of Red Lobster, earnings were 84 cents per share. That was still short of the 94 cents per share Wall Street expected.

Total revenue rose slightly to $2.32 billion, boosted by new locations. That was also short of the $2.33 billion Wall Street predicted, according to FactSet.

Darden's smaller chains fared better. Sales at LongHorn Steakhouse restaurants in the U.S. open at least a year increased 2.4 per cent. The figure climbed 2 per cent at the specialty restaurant group, which includes Bahama Breeze, The Capital Grille, Yard House, Eddie Vs and Seasons 52.

For the full year, Darden posted an adjusted profit of $2.47 per share. Annual revenue totalled $8.76 billion.

The company's board also declared a quarterly dividend of 55 cents per share.

Shares of Darden dropped $1.24, or 2.5 per cent, to $48.28 in midday trading. They had been down 9 per cent so far this year through Thursday's close.

___

Follow Candice Choi at www.twitter.com/candicechoi

The Canadian Press


Read more Business News

24497


Recent Trending




Today's Market
S&P TSX14779.35+15.369
S&P CDNX678.18-0.79
DJIA17672.60-141.38
Nasdaq4757.879+7.481
S&P 5002051.82-11.33
CDN Dollar0.8030-0.001
Gold1290.60-2.00
Oil46.35-2.34
Lumber311.50+6.50
Natural Gas2.895-0.091

 
Okanagan Companies
Pacific Safety0.115-0.005
Knighthawk0.010.00
QHR Technologies Inc1.38+0.06
Cantex0.035+0.005
Anavex Life Sciences0.1810.00
Metalex Ventures0.040.00
Russel Metals24.48+0.32
Copper Mountain Mining1.10-0.02
Colorado Resources0.155+0.005
ReliaBrand Inc0.006+0.001
Sunrise Resources Ltd0.055+0.03
Mission Ready Services0.22+0.02

 



23015

FEATURED Property
2183940112-4450 Gordon Drive
4 bedrooms 3 baths
$550,000
more details
image2image2image2
Click here to feature your property
Please wait... loading


How to price: workbook approach

In 2008 Self Counsel Press published my book - Pricing Strategies for Small Business. The book is now available in Europe, India, Russia and the United States. The purpose of the book was to make avai...


Ailing Parents: Tax Issues

If your parent has become ill, there can be several tax issues that come into play depending on the nature of their illness, their age and the role that family members are playing. For example, if you...


What do I pay ICBC for anyway?

If you have had ongoing dealings with ICBC as a result of a car accident than you have likely had the pleasure of dealing with at least two sides of ICBC. Initially the relationship starts off pleasan...

_








Member of BC Press Council


24697