8-KOther Events

DARDEN RESTAURANTS INC 8-K Report (Mar 20, 2003)

Filed March 20, 2003For Securities:DRI

Summary

Darden Restaurants, Inc. filed this Form 8-K on March 20, 2003, to report its financial results for the third fiscal quarter ended February 23, 2003. The company reported record quarterly sales of $1.18 billion, a 5.1% increase over the prior year. However, diluted earnings per share declined slightly to $0.35 from $0.36 in the same quarter last year. Management cited unanticipated workers' compensation and public liability expenses, along with severe weather, as key factors negatively impacting profitability. Despite these challenges, both Red Lobster and Olive Garden continued their long streaks of same-restaurant sales growth, albeit at slower paces than in prior periods. The company highlighted its continued expansion, with a significant increase in new restaurant openings, particularly for Smokey Bones. Darden also continued its share repurchase program, demonstrating a commitment to returning value to shareholders. The filing also noted the declaration of a regular semi-annual cash dividend and the introduction of a new test restaurant concept, Seasons 52, aiming to explore new growth avenues.

Key Highlights

  • 1Reported record third quarter sales of $1.18 billion, a 5.1% increase year-over-year.
  • 2Diluted earnings per share were $0.35, a slight decrease from $0.36 in the prior year's third quarter.
  • 3Red Lobster achieved its 21st consecutive quarter of same-restaurant sales growth (1.2%).
  • 4Olive Garden achieved its 34th consecutive quarter of same-restaurant sales growth (0.3%).
  • 5Company cited unanticipated workers' compensation, public liability expenses, and severe weather as negative impacts on earnings.
  • 6Continued expansion with significant new restaurant openings, especially for Smokey Bones (17 year-to-date).
  • 7Declared a regular semi-annual cash dividend of $0.04 per share and continued its common stock repurchase program.

Frequently Asked Questions

The company cited several factors including unanticipated workers' compensation and public liability expenses, higher than expected utility costs, increased marketing expenses in a challenging economic environment, and higher incremental pre-opening expenses due to an increase in new restaurant openings. Severe winter weather also negatively impacted sales and therefore profitability.

Both brands continued their positive trends. Red Lobster reported its 21st consecutive quarter of same-restaurant sales growth with a 1.2% increase, and Olive Garden reported its 34th consecutive quarter of same-restaurant sales growth with a 0.3% increase. However, the report notes that these figures were impacted by approximately two percentage points due to a shift in the Thanksgiving holiday and more severe winter weather compared to the previous year.

Darden is pursuing growth through aggressive expansion, particularly with the Smokey Bones brand, which is more than doubling its store count. The company is also exploring new concepts, evidenced by the opening of a test restaurant called Seasons 52, a fresh grill and wine bar with a focus on seasonally inspired, lower-calorie entrees. Additionally, Darden continues to return capital to shareholders through dividends and share repurchases.

Yes, Darden declared a regular semi-annual cash dividend of $0.04 per share, payable on May 1, 2003. The company also continued its share repurchase program, buying back 1.7 million shares during the quarter.