ORLANDO, Fla., Dec. 13 /PRNewswire/ -- Darden Restaurants, Inc.
(NYSE: DRI - news) today reported that strong same-restaurant sales growth of 6.1% at
Red Lobster and 5.9% at Olive Garden led to record second quarter earnings.
Earnings per diluted share were 30 cents, a 25% increase from prior year.
Excluding an unusual restructuring credit, earnings were 29 cents per diluted
share, a 21% increase from the prior year.
Total sales of $1.0 billion for
the quarter, which ended November 25, 2001, increased 8.8% over the prior
year.
"I'm very proud of the way our teams have responded to an extraordinarily
challenging environment, marked by the tragic events of September 11, the war
in Afghanistan and the ongoing threat of further terrorist activity," said Joe
R. Lee, Chairman and Chief Executive Officer.
"All of this combined to reduce
consumer confidence and accelerate the economic weakness that began earlier in
the year.
Our teams responded by placing even greater emphasis on providing
guests in every restaurant with service and value that exceeds their
expectations.
As a result, Red Lobster and Olive Garden enjoyed same-
restaurant sales growth that once again surpassed the casual dining industry
average.
And, our emerging concepts Bahama Breeze and Smokey Bones BBQ Sports
Bar, continued to make terrific progress in building great brands."
Highlights for the quarter ended November 25, 2001, include the following:
- Earnings after tax in the second quarter were $36.5 million, or 30 cents
per diluted share. The results include an unusual item that totals
$1.4 million after tax. The item is a restructuring credit that results
from reversal of a portion of the Company's fiscal 1997 restructuring
reserve due primarily to favorable lease terminations.
- Excluding the unusual credit, earnings after tax in the second quarter
were $35.1 million, or 29 cents per diluted share, on sales of
$1.0 billion. This includes a $1.5 million pre-tax contribution to the
Red Cross Disaster Relief Fund as part of Darden's participation in the
restaurant industry's Dine Out for America benefit on October 11. Last
year, earnings after tax were $29.5 million, or 24 cents per diluted
share, on sales of $932.0 million.
- Red Lobster led the Company with a 6.1% same-restaurant sales increase
in the quarter, its 16th consecutive quarter of same-restaurant sales
gains.
- Olive Garden reported its 29th consecutive quarter of same-restaurant
sales growth with a 5.9% increase.
- Bahama Breeze opened two new restaurants during the quarter. It has now
opened four restaurants year-to-date, increasing the overall number of
restaurants in operation to 25. Bahama Breeze plans to open a total of
8 to 10 restaurants for the full fiscal year.
- Smokey Bones BBQ Sports Bar opened two restaurants during the quarter,
bringing the total opened year-to-date to three and the overall number
in operation to 12. Smokey Bones BBQ plans to open 8 to 10 restaurants
for the full fiscal year.
- The Company repurchased over 400,000 shares of its common stock in the
quarter.
Operating Highlights
RED LOBSTER'S second quarter sales of $534.9 million were 6.3% above prior
year, due primarily to its 6.1% increase in same-restaurant sales -- the 16th
consecutive quarter of same-restaurant sales growth for Red Lobster.
Last
year, Red Lobster reported second quarter same-restaurant sales growth of
8.4%.
With the increased sales and lower food costs and marketing expenses as
a percentage of sales, Red Lobster achieved strong double-digit operating
profit growth for the quarter.
"We had another terrific quarter at Red Lobster," said Dick Rivera,
President of Red Lobster.
"We are a leader in casual dining because we are
continuously enhancing the dining experience.
We bring a fresh approach to
casual dining, featuring great seafood, good times and hospitality.
Our crew
throughout the company rose to the occasion this last quarter.
They performed
at record levels while providing our guests a welcoming environment where they
could dine with family and friends while enjoying one of their favorite
cuisines -- seafood. "
OLIVE GARDEN'S second quarter sales of $442.5 million were 8.6% above
prior year, propelled by its 5.9% same-restaurant sales increase for the
quarter and operation of 16 more restaurants this year than last.
This is the
29th consecutive quarter of same-restaurant sales growth for Olive Garden, and
follows a 7.2% increase for the same quarter last year.
The increased sales,
along with lower labor costs and marketing expenses as a percentage of sales,
combined to produce another quarter of double-digit operating profit growth.
"We had great results again this quarter," said Brad Blum, President of
Olive Garden.
"The Olive Garden team's relentless focus on guest
satisfaction, operating excellence and strong branding has never been more
important given the extraordinary social and economic stresses that exist
throughout the country.
We appreciate the opportunity to make life just a
little easier for those who visit our restaurants.
Our passion to provide
every guest with a genuine Italian dining experience, and for having people
feel welcome, special and appreciated is more appropriate now than ever."
BAHAMA BREEZE continued to enjoy very enthusiastic guest response and
critical acclaim during the quarter, and to generate strong average sales per
restaurant.
It opened new restaurants in Broomfield, CO, and Lone Tree, CO,
both of which are in the Denver metropolitan area.
Bahama Breeze now operates
25 restaurants in 18 markets.
At least four more openings are scheduled for
this fiscal year.
SMOKEY BONES BBQ SPORTS BAR opened two restaurants in the second quarter,
bringing the total number in operation to 12.
The two newest are in Chicago
Ridge, IL, and Orlando, FL.
Since the end of the quarter, a new restaurant
has opened in Springfield, IL.
Five additional restaurants currently under
construction are expected to open this fiscal year.
Other Actions
The Board of Directors also elected David Hughes a Director.
Hughes is
the Chairman of the Board and Chief Executive Officer for Hughes Supply, Inc.
He joined Hughes Supply in 1968, assuming increasing responsibilities until he
became Chairman and CEO in 1986.
He also serves on the Boards of SunTrust,
Inc. and Brown & Brown Insurance.
He has been active in the Central Florida
community for many years, serving on the boards of Orlando Regional Healthcare
System, Economic Development Commission, Florida Council of 100 and Boys and
Girls Clubs of America.
"We are very pleased to welcome David to our Board," said Lee.
"He has
built a very successful business, is active in his community and is someone
who has great integrity, vision and experience.
He will be a tremendous asset
to our company."
Darden continued the buyback of its common stock, repurchasing over
400,000 shares in the second quarter.
Cumulatively, since the initial
authorization of its repurchase program in December 1995, the Company has
repurchased 54.7 million shares from a total authorization of 64.6 million
shares.
November 2001 Same-Restaurant Sales Results
Darden also reported same-restaurant sales results for the four-week
November fiscal month that ended November 25, 2001.
This period is the last
month of the Company's fiscal 2002 second quarter.
Same-restaurant sales at Olive Garden were up 8% to 9% for the month
compared with the same period last year.
These results were driven by a 4%
increase in same-restaurant guest counts, a 2% to 3% increase in pricing and a
2% increase due to menu mix changes.
During the fiscal month, Olive Garden
introduced new advertising that featured Romana Neri, head chef at its
Culinary Institute of Tuscany, leading Olive Garden chefs visiting the
Institute and also highlighted a significantly improved "Chicken Marsala".
The "Chicken Marsala" offering ran for the three weeks from October 29 through
November 18, and did not carry a price discount.
During the same period last
year, Olive Garden promoted its "Stuffed Chicken Parmigiana for $9.95",
resulting in a 5% to 6% same-restaurant sales increase.
Same-restaurant sales at Red Lobster were up 6% to 7% for the month
compared with the prior year.
This reflected a 6% to 7% increase in same-
restaurant guest counts, a 2% increase in pricing and a 2% decline from menu
mix changes.
Red Lobster's successful "30 Shrimp for $9.99" promotion
started September 10 and ended on November 18.
For November last year, Red
Lobster's advertising emphasis was on brand building, and the company had a 7%
to 8% same-restaurant sales increase.
At the end of its fiscal second quarter, Darden Restaurants, Inc., in
Orlando, FL, owned and operated 1,182 Red Lobster, Olive Garden, Bahama Breeze
and Smokey Bones BBQ Sports Bar restaurants in North America.
Forward-looking statements in this news release, if any, are made under
the Safe Harbor provisions of the Private Securities Litigation Reform Act of
1995.
Certain important factors could cause results to differ materially from
those anticipated by the forward-looking statements, including the impact of
changing economic or business conditions, the impact of competition, the
availability of favorable credit and trade terms, the impact of changes in the
cost or availability of food and real estate, government regulation,
construction costs, weather conditions and other factors discussed from time
to time in reports filed by the company with the Securities and Exchange
Commission.
DARDEN RESTAURANTS, INC.
NUMBER OF RESTAURANTS 11/26/00 11/25/01
620 Red Lobster USA 629
32 Red Lobster Canada 32
652 Total Red Lobster 661 463 Olive Garden USA 478
5 Olive Garden Canada 6
468 Total Olive Garden 484 15 Bahama Breeze 25 4 Smokey Bones BBQ 12 1,139 Total Restaurants 1,182
DARDEN RESTAURANTS, INC.
SECOND QUARTER FY 2002 FINANCIAL HIGHLIGHTS
(Unaudited)
(In Millions, Except per Share Data) 13 Weeks Ended 26 Weeks Ended 11/25 11/26 11/25 11/26
2001 2000 2001 2000
Sales $1,013.5 $932.0 $2,095.0 $1,950.2 Net Earnings (1) $36.5 $29.5 $98.6 $86.5 Net Earnings per Share (1):
Basic $0.31 $0.25 $0.84 $0.72
Diluted $0.30 $0.24 $0.81 $0.70 Average Number of Common Shares
Outstanding:
Basic 116.8 119.8 117.1 120.7
Diluted 122.0 123.7 122.2 124.1 Note:
(1) Earnings before restructuring
credit were as follows: Earnings before Restructuring
Credit $35.1 $29.5 $97.2 $86.5 Earnings per Share before
Restructuring Credit:
Basic $0.30 $0.25 $0.83 $0.72
Diluted $0.29 $0.24 $0.80 $0.70
DARDEN RESTAURANTS, INC.
CONSOLIDATED STATEMENTS OF EARNINGS
(Unaudited)
(In Thousands, Except per Share Data)
13 Weeks Ended 26 Weeks Ended 11/25 11/26 11/25 11/26
2001 2000 2001 2000
Sales $1,013,504 $931,958 $2,094,994 $1,950,163
Costs and Expenses:
Cost of sales:
Food and beverage 321,302 298,361 664,894 629,398
Restaurant labor 328,361 302,908 661,807 621,539
Restaurant expenses 153,658 135,857 307,808 275,301
Total Cost of Sales 803,321 737,126 1,634,509 1,526,238
Selling, general and
administrative 106,154 105,955 213,095 205,300
Depreciation and amortization 41,061 35,789 80,571 71,425
Interest, net 8,982 7,777 17,256 14,051
Restructuring credit (1) -2,269 -2,269
Total Costs and Expenses 957,249 886,647 1,943,162 1,817,014
Earnings before Income Taxes 56,255 45,311 151,832 133,149
Income Taxes -19,792 -15,770 -53,213 -46,687
Net Earnings $36,463 $29,541 $98,619 $86,462 Net Earnings per Share:
Basic $0.31 $0.25 $0.84 $0.72
Diluted $0.30 $0.24 $0.81 $0.70 Average Number of Common Shares
Outstanding:
Basic 116,800 119,800 117,100 120,700
Diluted 122,000 123,700 122,200 124,100
Note:
(1) Earnings before restructuring
credit were as follows: 13 Weeks Ended 26 Weeks Ended
11/25 11/26 11/25 11/26
2001 2000 2001 2000
Pretax Earnings before
Restructuring Credit $53,986 $45,311 $149,563 $133,149
Income Taxes -18,917 -15,770 -52,338 -46,687 Earnings before Restructuring
Credit $35,069 $29,541 $97,225 $86,462
Earnings per Share before
Restructuring Credit
Basic $0.30 $0.25 $0.83 $0.72
Diluted $0.29 $0.24 $0.80 $0.70
DARDEN RESTAURANTS,INC.
CONSOLIDATED BALANCE SHEETS
(In Thousands) (Unaudited)
11/25/2001 5/27/2001
ASSETS
Current Assets:
Cash and cash equivalents $19,999 $61,814
Receivables 24,579 32,870
Inventories 226,796 148,429
Net assets held for disposal 10,489 10,087
Prepaid expenses and other
current assets 16,355 26,942
Deferred income taxes 48,502 48,000
Total Current Assets 346,720 328,142
Land, Buildings and Equipment 1,824,715 1,779,515
Other Assets 150,193 108,877
Total Assets $2,321,628 $2,216,534 LIABILITIES AND STOCKHOLDERS'
EQUITY
Current Liabilities:
Accounts payable $132,384 $156,859
Short-term debt 107,000 12,000
Current portion of long-term
debt 2,640 2,647
Accrued payroll 67,776 82,588
Accrued income taxes 37,901 47,698
Other accrued taxes 26,461 27,429
Other current liabilities 217,829 225,037
Total Current Liabilities $591,991 $554,258
Long-term Debt 514,278 517,927
Deferred Income Taxes 93,738 90,782
Other Liabilities 19,849 20,249
Total Liabilities $1,219,856 $1,183,216 Stockholders' Equity:
Common stock and surplus $1,440,381 $1,405,799
Retained earnings 626,103 532,121
Treasury stock -899,989 -840,254
Accumulated other
comprehensive income -13,931 -13,102
Unearned compensation -48,833 -49,322
Officer notes receivable -1,959 -1,924
Total Stockholders' Equity $1,101,772 $1,033,318
Total Liabilities and
Stockholders' Equity $2,321,628 $2,216,534