Summary
Darden Restaurants, Inc. reported financial results for the third quarter and the first nine months ended February 23, 2014. For the third quarter, sales decreased by 1.1% to $2.23 billion, largely due to a 5.6% decline in U.S. same-restaurant sales across its core brands, compounded by severe winter weather. Net earnings from continuing operations fell 18.6% to $109.5 million, and diluted EPS decreased by 19.6% to $0.82. For the first nine months, sales saw a modest 3.0% increase to $6.44 billion, driven by the addition of new restaurants, though same-restaurant sales declined by 3.4%. Net earnings from continuing operations decreased significantly by 28.5% to $199.6 million, with diluted EPS dropping 29.6% to $1.50. Key strategic initiatives include the planned separation of the Red Lobster business, expected in early fiscal 2015, through a tax-free spin-off or sale. This move aims to allow each business unit to focus on its specific market challenges and opportunities. The company also announced cost-reduction measures, including workforce reductions, expected to yield significant annual savings starting fiscal year 2015. Management anticipates continued challenges in same-restaurant sales for fiscal 2014, particularly for Red Lobster and Olive Garden, while LongHorn Steakhouse shows positive trends. Overall, the company projects a decline in diluted EPS for fiscal 2014, excluding costs related to the Red Lobster separation.
Financial Highlights
51 data points| Revenue | $1.62B |
| Cost of Revenue | $1.27B |
| Gross Profit | $352.70M |
| SG&A Expenses | $154.20M |
| Operating Expenses | $1.53B |
| Operating Income | $86.60M |
| Net Income | $109.70M |
| EPS (Basic) | $0.84 |
| EPS (Diluted) | $0.82 |
| Shares Outstanding (Basic) | 131.30M |
| Shares Outstanding (Diluted) | 133.40M |
Key Highlights
- 1Third-quarter sales declined 1.1% to $2.23 billion, impacted by a 5.6% decrease in U.S. same-restaurant sales, exacerbated by severe winter weather.
- 2Net earnings from continuing operations for the third quarter decreased by 18.6% to $109.5 million, with diluted EPS falling 19.6% to $0.82.
- 3The company announced plans to separate the Red Lobster business, expected to be completed in early fiscal 2015, either through a spin-off or sale.
- 4Cost-saving initiatives, including workforce reductions, are projected to generate approximately $60.0 million in annual savings starting in fiscal year 2015.
- 5LongHorn Steakhouse demonstrated strength with positive same-restaurant sales growth, contrasting with declines at Olive Garden and Red Lobster.
- 6For the first nine months, total sales increased 3.0% to $6.44 billion due to new restaurant openings, but net earnings from continuing operations dropped 28.5% to $199.6 million.
- 7The company anticipates a 15.0% to 20.0% decline in diluted EPS for fiscal year 2014, excluding costs associated with the Red Lobster separation.