Darden Restaurants Inc.’s (DRI) first quarter 2011 earnings of 80 cents per share were ahead of the Zacks Consensus Estimate of 77 cents and recorded an increase of 19.0% year over year.
Total revenue spiked up 4.2% from the prior-year quarter to $1.81 billion, but was below the Zacks Consensus Estimate of $1.82 billion. Combined same store sales for the company’s three core brands Olive Garden, Red Lobster and LongHorn Steakhouse rose 1.1% and fared better than the zero expected growth as per the Knapp-Track benchmark of U.S. same-restaurant sales.
Operating Highlights
By restaurant concepts, Olive Garden’s sales upped 6.8% year over year to $877.0 million, driven by a 2.7% rise in comps and revenues from 32 new restaurants.
Sales at Red Lobster fell 0.8% to $600.0 million largely due to a 1.7% decrease in comps, partially offset by revenues from four net new restaurants.
At LongHorn Steakhouse, sales were up 6.8% to $226.0 million as the segment experienced a 2.2% growth in comps and revenues from 12 net new restaurants in the quarter.
Sales at The Specialty Restaurant Groups increased 11.7% to $107 million, driven by a 2.7% rise in comps at The Capital Grille and 5.8% at Seasons 52, partially offset by a same store sales drop of 0.1% at Bahama Breeze. Additionally, the growth in revenues was also attributable to the addition of three net new restaurants: The Capital Grille, Seasons 52 and one new restaurant at Bahama Breeze.
Financial Position
Darden ended first quarter 2011 with cash and cash equivalents of $77.5 million and shareholders’ equity of $1.9 billion. The company purchased over 2.4 million shares of its common stock during the first quarter.
Outlook
Darden also reaffirmed its 2011 earnings per share growth target in the range of 14% to 17%, based on sales growth expectations in the range of 5.5% – 6.5%, blended same store sales to be up 2% to 3% and opening of 70 to 75 net new restaurants in fiscal 2011.
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