ORLANDO, Fla., Dec 17, 2002 /PRNewswire-FirstCall via COMTEX/ -- Darden Restaurants, Inc. (NYSE: DRI) today reported record quarterly sales of $1.07 billion for the fiscal second quarter ended November 24, 2002, and that earnings per diluted share also reached a new quarterly high of 21 cents, an 11% increase from prior year, excluding an unusual restructuring credit last year.
"We held up well this quarter despite difficult conditions, but there was more variability than we would have liked," said Joe Lee, Darden's Chairman and Chief Executive Officer. "While Olive Garden achieved record levels of performance for the quarter, Red Lobster's results during the first two months were softer than expected. However, Red Lobster did experience very strong sales growth in the final month, and we're encouraged by the renewed momentum. Fundamentals of the business, such as guest satisfaction and employee retention trends, remain strong and we believe Darden is well-positioned to achieve solid, consistent growth this fiscal year and for the long-term."
Highlights for the quarter ended November 24, 2002, included the following:
* Earnings after tax in the second quarter were $37.5 million, or
21 cents per diluted share, on sales of $1.07 billion. Last year,
earnings after tax before an unusual restructuring credit were
$35.1 million, or 19 cents per diluted share, on sales of
$1.01 billion.
* Total sales of $1.07 billion for the quarter represent a 6.4% increase
over prior year, and establish a new second quarter record for Darden.
* Olive Garden led the Company with a 3.5% increase in same-restaurant
sales, its 33rd consecutive quarter of same-restaurant sales growth.
* Red Lobster reported its 20th consecutive quarter of same-restaurant
sales growth with a 2.3% increase.
* Same-restaurant sales results for Red Lobster and Olive Garden
benefited by approximately one percentage point this quarter from a
shift in the Thanksgiving holiday. Both companies close for the
holiday, which was not in Darden's fiscal second quarter this year
while it did occur in the second quarter last year.
* Bahama Breeze opened two new restaurants during the quarter, bringing
its total number of restaurants to 32.
* Smokey Bones opened six new restaurants during the quarter, bringing
the total number of restaurants it operates to 27.
* The Company continued its share repurchase program, buying back
1.2 million shares of its common stock in the quarter.
Operating Highlights
OLIVE GARDEN'S second quarter sales of $472.7 million were a 7.2% increase from the prior year due to its same-restaurant sales growth and its having 23 more restaurants in operation than the prior year. With the company's 3.5% gain, Olive Garden achieved its 33rd consecutive quarter of same-restaurant sales growth and opened 11 restaurants during the quarter, the most since 1995. The increased sales, combined with lower food and beverage expense and restaurant labor costs as a percent of sales, resulted in record quarterly operating profit that also represents a strong double-digit increase over last year.
"It was another successful quarter at Olive Garden," said Drew Madsen, President of Olive Garden. "The focus on operating excellence and strong branding led to same-restaurant sales growth that was again ahead of the casual dining industry average. Guests continued to be motivated by our promise of a genuine Italian dining experience featuring fresh, simple and delicious Italian food, accompanied by a great glass of wine, in a home-like Italian setting where everyone is treated like family. And, our teams continued to deliver on that promise throughout the company."
RED LOBSTER'S second quarter sales of $549.2 million were 3.5% above prior year, driven primarily by its 2.3% increase in same-restaurant sales, which extended Red Lobster's string of comparable sales gains to 20 consecutive quarters. Red Lobster enjoyed strong November sales growth, partially offsetting the sales softness it experienced during September and October. Due to the combination of lower than expected sales growth and a value- oriented marketing calendar during the first two months of the quarter, Red Lobster's restaurant labor costs, restaurant expenses, and selling, general and administrative expenses each increased as a percent of sales. As a result, its operating profit declined versus last year.
"We finished the quarter strongly, with a very good November," said Edna Morris, President of Red Lobster. "We did so by building upon the improving operating excellence of our crew with an appealing, effectively advertised entree feature after a disappointing marketing feature the previous two months. Our ability to quickly reverse unfavorable sales trends underscores Red Lobster's many competitive advantages, including the quality of our crew and the fundamental strength of our brand and operations."
BAHAMA BREEZE opened two new restaurants during the quarter, one in Sunrise, FL and the other in Chesterfield, MO, bringing the year-to-date total to three openings. Three more openings are scheduled for this fiscal year.
SMOKEY BONES opened six new restaurants during the quarter. In addition, two more restaurants have opened since the end of the quarter, one in Dunwoody, GA and the other in Duluth, GA. In fiscal year 2003, at least 20 restaurants are expected to open, more than doubling the number open at the end of fiscal 2002.
Other Actions
After the end of the second quarter, Darden announced that it will begin the next phase of testing for a new restaurant called Seasons 52(SM). It is a casually sophisticated fresh grill and wine bar with seasonally inspired menus offering the freshest ingredients to create great tasting entrees that are nutritionally balanced and lower in calories. Seasons 52(SM) is currently under construction and is scheduled to open in Orlando, FL, in Darden's fiscal third quarter.
Darden continued its buyback of common stock, purchasing 1.2 million shares in the second quarter. Cumulatively, since the initial authorization of its repurchase program in December 1995, the Company has repurchased 91.0 million shares, and it has approximately 24.4 million shares remaining under current authorizations.
November 2002 Same-Restaurant Sales Results
Darden also reported same-restaurant sales for the four-week November fiscal month ended November 24, 2002. This period is the last month of the Company's fiscal 2003 second quarter.
Same-restaurant sales at Red Lobster were up 10% to 11% for the month, which reflected a 5% to 6% increase in guest traffic and a 4% to 5% increase in check average. The check average increase was due to a 1% to 2% increase in pricing and a 2% to 3% increase from menu mix changes. Red Lobster's fiscal November 2003 results include the final week of the "30-Shrimp for $9.99" promotion that started on September 9 and ended on November 3, as well as three weeks of a "Lobster and Shrimp" feature. During fiscal November of last year, the "30-Shrimp for $9.99" promotion ran for three weeks, followed by one week without any advertising, and Red Lobster had a 6% to 7% same- restaurant sales increase.
Same-restaurant sales at Olive Garden were up approximately 3% for the month, and that reflected a 4% increase in check average and a 1% decline in guest traffic. The check average increase was a result of a 2% to 3% increase in pricing and a 1% to 2% increase from menu mix changes. This fiscal November, Olive Garden had four weeks of advertising featuring "Chicken Marsala." During fiscal November of last year, "Chicken Marsala" was featured concurrently with "Soup and Salad" advertising for three weeks followed by one week without any advertising. Same-restaurant sales at Olive Garden during November last year increased 8% to 9%.
This year's shift of the Thanksgiving holiday from fiscal November to fiscal December favorably affected November same-restaurant sales results at both Red Lobster and Olive Garden by approximately three percentage points. Fiscal December results will be adversely affected by a similar amount as a result of the calendar shift.
Darden Restaurants, Inc., headquartered in Orlando, FL, owns and operates over 1,200 Red Lobster, Olive Garden, Bahama Breeze and Smokey Bones restaurants with annual sales of $4.4 billion.
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
11/24/02 11/25/01
639 Red Lobster USA 629
31 Red Lobster Canada 32
670 Total Red Lobster 661
501 Olive Garden USA 478
6 Olive Garden Canada 6
507 Total Olive Garden 484
32 Bahama Breeze 25
27 Smokey Bones 12
1,236 Total Restaurants 1,182
DARDEN RESTAURANTS, INC.
SECOND QUARTER FY 2003 FINANCIAL HIGHLIGHTS
(In Millions, Except per Share Data)
(Unaudited)
13 Weeks Ended 26 Weeks Ended
11/24/2002 11/25/2001 11/24/2002 11/25/2001
Sales $1,071.5 $1,007.1 $2,246.1 $2,080.5
Net Earnings (1) $37.5 $36.5 $109.4 $98.6
Net Earnings per Share (1):
Basic $0.22 $0.21 $0.64 $0.56
Diluted $0.21 $0.20 $0.61 $0.54
Average Number of Common
Shares Outstanding:
Basic 170.9 175.1 171.3 175.6
Diluted 178.7 182.9 179.3 183.3
Note:
(1) Earnings before restructuring credit were as follows:
Earnings before
Restructuring Credit $37.5 $35.1 $109.4 $97.2
Earnings per Share before
Restructuring Credit:
Basic $0.22 $0.20 $0.64 $0.55
Diluted $0.21 $0.19 $0.61 $0.53
DARDEN RESTAURANTS, INC.
CONSOLIDATED STATEMENTS OF EARNINGS
(In Thousands, Except per Share Data)
(Unaudited)
13 Weeks Ended 26 Weeks Ended
11/24/2002 11/25/2001 11/24/2002 11/25/2001
Sales $1,071,531 $1,007,081 $2,246,096 $2,080,491
Costs and Expenses:
Cost of sales:
Food and beverage 330,954 321,302 696,190 664,894
Restaurant labor 353,774 328,361 723,136 661,807
Restaurant expenses 169,889 151,096 338,466 302,346
Total Cost of Sales 854,617 800,759 1,757,792 1,629,047
Selling, general and
administrative 103,892 102,293 210,883 204,054
Depreciation and
amortization 45,930 41,061 91,071 80,571
Interest, net 10,729 8,982 20,982 17,256
Restructuring credit and
asset impairment (1) 143 -2,269 143 -2,269
Total Costs and
Expenses 1,015,311 950,826 2,080,871 1,928,659
Earnings before Income Taxes 56,220 56,255 165,225 151,832
Income Taxes -18,742 -19,792 -55,861 -53,213
Net Earnings $37,478 $36,463 $109,364 $98,619
Net Earnings per Share:
Basic $0.22 $0.21 $0.64 $0.56
Diluted $0.21 $0.20 $0.61 $0.54
Average Number of Common Shares
Outstanding:
Basic 170,900 175,100 171,300 175,600
Diluted 178,700 182,900 179,300 183,300
Note:
(1) Earnings before restructuring credit were as follows:
13 Weeks Ended 26 Weeks Ended
11/24/2002 11/25/2001 11/24/2002 11/25/2001
Pretax Earnings before
Restructuring Credit $56,220 $53,986 $165,225 $149,563
Income Taxes -18,742 -18,917 -55,861 -52,338
Earnings before
Restructuring Credit $37,478 $35,069 $109,364 $97,225
Earnings per Share before
Restructuring Credit:
Basic $0.22 $0.20 $0.64 $0.55
Diluted $0.21 $0.19 $0.61 $0.53
DARDEN RESTAURANTS, INC.
CONSOLIDATED BALANCE SHEETS
(In Thousands)
(Unaudited)
11/24/2002 5/26/2002
ASSETS
Current Assets:
Cash and cash equivalents $20,880 $152,875
Short-term investments -- 9,904
Receivables 32,415 29,089
Inventories 231,814 172,413
Net assets held for
disposal 10,087 10,047
Prepaid expenses and
other current assets 17,424 23,076
Deferred income taxes 46,966 52,127
Total Current Assets $359,586 $449,531
Land, Buildings and
Equipment 2,039,977 1,920,768
Other Assets 162,549 159,437
Total Assets $2,562,112 $2,529,736
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable $165,625 $160,064
Accrued payroll 73,696 87,936
Accrued income taxes 52,190 68,504
Other accrued taxes 31,271 30,474
Other current liabilities 247,200 254,036
Total Current
Liabilities $569,982 $601,014
Long-term Debt 659,656 662,506
Deferred Income Taxes 125,091 117,709
Other Liabilities 19,060 19,630
Total Liabilities $1,373,789 $1,400,859
Stockholders' Equity:
Common stock and surplus $1,501,787 $1,474,054
Retained earnings 863,253 760,684
Treasury stock -1,114,668 -1,044,915
Accumulated other
comprehensive income -13,774 -12,841
Unearned compensation -46,594 -46,108
Officer notes receivable -1,681 -1,997
Total Stockholders'
Equity $1,188,323 $1,128,877
Total Liabilities
and Stockholders'
Equity $2,562,112 $2,529,736
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SOURCE Darden Restaurants, Inc.
Analysts, Matthew Stroud, +1-407-245-5550, or Media, Jim
DeSimone, +1-407-245-5192, both of Darden Restaurants, Inc.
/Company News On-Call: http://www.prnewswire.com/gh/cnoc/comp/105228.html
http://www.darden.com
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