8-KOther Events

DARDEN RESTAURANTS INC 8-K Report (Feb 18, 2003)

Filed February 18, 2003For Securities:DRI

Summary

Darden Restaurants, Inc. (DRI) filed this 8-K on February 18, 2003, to provide a financial outlook for its third fiscal quarter ending February 23, 2003. The company anticipates diluted earnings per share (EPS) to be in the range of $0.34 to $0.36. Total sales are projected to increase by 5% to 6%, with same-restaurant sales for its key brands, Red Lobster and Olive Garden, expected to be up approximately 1% on a blended basis. Despite these projections, Darden acknowledges disappointment, noting that the performance is expected to be below the previous year's strong third quarter and below their internal expectations. Management cited several headwinds impacting results, including higher-than-anticipated worker's compensation and insurance costs, increased marketing expenses due to a challenging economic environment, severe winter weather, and higher utility expenses. The company also highlighted planned incremental pre-opening expenses related to new restaurant openings. Consequently, Darden revised its full-year EPS growth forecast downwards to 5%-10%, below its long-term target.

Key Highlights

  • 1Darden Restaurants projects Q3 fiscal 2003 diluted EPS to be between $0.34 and $0.36.
  • 2Total sales for Q3 are expected to grow 5% to 6%.
  • 3Same-restaurant sales for Red Lobster and Olive Garden are projected to increase approximately 1% on a blended basis for Q3.
  • 4The company is experiencing higher worker's compensation, insurance, and utility costs.
  • 5Increased marketing expenses are being incurred to address a challenging economic and competitive environment.
  • 6Full-year fiscal 2003 EPS growth forecast has been lowered to 5%-10% due to softer Q3 results and other factors.
  • 7Darden plans to discuss results and provide additional information during their Q3 conference call on March 21, 2003.

Frequently Asked Questions

Darden Restaurants expects diluted earnings per share (EPS) to be in the range of $0.34 to $0.36 for the third quarter ending February 23, 2003. Total sales are anticipated to increase by 5% to 6%, with same-restaurant sales for Red Lobster and Olive Garden growing approximately 1% on a blended basis.

The company's third quarter results are expected to be adversely affected by several factors, including higher-than-anticipated worker's compensation and insurance costs, increased marketing expenses, severe winter weather, higher utility expenses, and planned incremental pre-opening expenses for new restaurants.

Yes, due to softer-than-expected third quarter results, continued weakness in consumer confidence, and potential weather risks in the fourth quarter, Darden now anticipates that its full fiscal year earnings per share (EPS) growth will be between 5% and 10%, which is below its long-term target.

Darden Restaurants has scheduled its third quarter conference call for March 21, 2003, at 8:30 a.m. Eastern Standard Time, where additional information will be provided.