ORLANDO, Fla., Dec 17, 2009 /PRNewswire-FirstCall via COMTEX News Network/ -- Darden Restaurants, Inc. (NYSE: DRI) today reported sales and diluted net earnings per share for the fiscal second quarter ended November 29, 2009. In the second quarter, diluted net earnings per share from continuing operations increased 2% to 43 cents, versus 42 cents in the prior year.
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Second quarter sales from continuing operations were $1.64 billion, compared to $1.67 billion in the prior year, a 1.6% decrease. Blended same-restaurant sales for Olive Garden, Red Lobster and LongHorn Steakhouse were down 4.7% this quarter. Excluding the impact of the Thanksgiving holiday week, which was in the fiscal second quarter this year but the fiscal third quarter last year, blended same-restaurant sales were down 3.9%, which compares to an estimated decline of 5.9% for the Knapp-Track(TM) benchmark of U.S. same-restaurant sales, excluding Darden.
"Our performance was competitively strong once again this quarter in what continued to be a very tough business environment," said Clarence Otis, Chairman and Chief Executive Officer of Darden. "We're pleased that our same-restaurant sales results remain stronger than the average for our industry as measured by the Knapp-Track(TM) benchmark, and that we're achieving these results without heavy discounting. Importantly, we're translating our competitively strong sales into solid earnings results."
"Our performance reflects industry leading brands and a robust brand support platform that is unmatched in full-service dining," continued Otis. "And in continuing to highlight a broad range of brand attributes that includes but is not limited to price, we're strengthening our long-term brand positioning with consumers. Finally, all of this is possible because of the talented teams providing direction and support for our brands outside our restaurants and delivering within our restaurants. In a difficult environment, our people are making the extra effort, and it's paying off in greater guest satisfaction and profitable market share growth for the overall company."
Highlights for the quarter ended November 29, 2009 include the following:
-- Net earnings from continuing operations for the second quarter were
$61.2 million, or 43 cents per diluted share on sales of $1.64 billion.
Last year, net earnings from continuing operations were $58.5 million,
or 42 cents per diluted share, on sales of $1.67 billion.
-- Total second quarter sales from continuing operations of $1.64 billion
represent a 1.6% decrease over the prior year.
-- In the second quarter, U.S. same-restaurant sales decreased 1.4% at
Olive Garden, 8.4% at Red Lobster and 6.2% at LongHorn Steakhouse.
These results include the impact of a shift in the Thanksgiving holiday
week, which moved to the fiscal second quarter this year from the fiscal
third quarter last year. Excluding the effect of the holiday shift,
U.S. same-restaurant sales decreased 0.7% at Olive Garden, 7.6% at Red
Lobster and 5.0% at LongHorn Steakhouse, which compares to an estimated
decrease of 5.9% in the Knapp-Track(TM) benchmark of U.S.
same-restaurant sales, excluding Darden.
-- The Company's quarterly earnings results include pre-tax expenses of
approximately $2 million of asset impairments, primarily related to the
closure of a LongHorn Steakhouse restaurant due to fire. Plans are
underway to re-build and re-open the restaurant at the same location in
fiscal 2011.
-- The Company's Board of Directors declared a quarterly dividend of 25
cents per share.
Operating Highlights
OLIVE GARDEN'S second quarter sales of $783 million were 2.8% above prior year, driven by revenue from 32 net new restaurants, partially offset by a U.S. same-restaurant sales decline of 1.4%. For the quarter, on a percentage of sales basis, lower food and beverage expenses and restaurant expenses more than offset higher labor expenses, selling, general and administrative expenses and depreciation expenses. As a result, operating profit as a percentage of sales increased for the quarter.
RED LOBSTER'S second quarter sales of $562 million were 6.5% below prior year, driven by a U.S. same-restaurant sales decrease of 8.4%, partially offset by revenue from seven net new restaurants. For the quarter, on a percentage of sales basis, lower food and beverage expenses and restaurant expenses more than offset the company's increased restaurant labor expenses, selling, general, and administrative expenses and depreciation expenses, resulting in an increase in operating profit as a percent of sales.
LONGHORN STEAKHOUSE'S second quarter sales of $200 million were 3.2% below the prior year, driven by a same-restaurant sales decrease of 6.2%, partially offset by revenue from nine net new restaurants. For the quarter, on a percentage of sales basis, lower food and beverage expenses and restaurant expenses more than offset the company's increased restaurant labor expenses, selling, general, and administrative expenses and depreciation expenses. As a result, operating profit as a percentage of sales increased for the quarter.
THE CAPITAL GRILLE'S second quarter sales of $59 million were 3.0% below the prior year results, driven by a same-restaurant sales decrease of 14.2% (or 11.2% excluding the Thanksgiving holiday shift) and partially offset by the addition of six net new restaurants.
BAHAMA BREEZE'S second quarter sales of $27 million were 2.0% below prior year, driven by a same-restaurant sales decrease of 6.1% (or 4.5% excluding the Thanksgiving holiday shift) and partially offset by the addition of one net new restaurant.
Other Actions
Darden's Board of Directors declared a quarterly cash dividend of 25 cents per share on the Company's outstanding common stock. The dividend is payable on February 1, 2010 to shareholders of record at the close of business on January 8, 2010.
Fiscal September, October and November 2009 U.S. Same-Restaurant Sales Results
Darden reported that U.S. same-restaurant sales for the fiscal months of September, October and November were as follows:
Olive Garden September October November*
--------- ------- ---------
Same-Restaurant Sales 0% to -1% 1% -5% to -6%
Same-Restaurant Traffic -1% to -2% -1% to -2% -6% to -7%
Pricing 3% 2% to 3% 2%
Menu-mix -1% to -2% 0% to -1% 0% to -1%
Red Lobster September October November*
--------- ------- ---------
Same-Restaurant Sales -8% to -9% -7% to -8% -10%
Same-Restaurant Traffic -10% -8% to -9% -11% to 12%
Pricing 1% to 2% 1% to 2% 1% to 2%
Menu-mix 0% to 1% 0% to -1% 0%
LongHorn Steakhouse September October November*
--------- ------- ---------
Same-Restaurant Sales -8% -3% to -4% -6% to -7%
Same-Restaurant Traffic -9% to -10% -5% to -6% -8% to -9%
Pricing 2% 2% to 3% 2% to 3%
Menu-mix -1% 0% to -1% 0% to -1%
* Note: Fiscal November same-restaurant sales results were on average adversely affected by an estimated 270 basis points due to the Thanksgiving week shifting into fiscal November this year from fiscal December last year.
Fiscal 2010 Outlook
Darden announced that it expects reported diluted net earnings per share growth from continuing operations of flat to +4% in fiscal 2010 compared to reported diluted net earnings per share from continuing operations in fiscal 2009, which were $2.65. The expected range of earnings results for fiscal year 2010 is slightly improved from the outlook the Company provided in September in connection with the release of its fiscal first quarter results. The Company's earnings expectations for fiscal year 2010 anticipate (1) blended U.S. same-restaurant sales for Red Lobster, Olive Garden and LongHorn Steakhouse of
approximately -4% to -3% in fiscal 2010, a range that is one percentage point lower on the bottom end and three points lower on the top end than the range the Company provided previously; (2) the opening of approximately 50 to 55 net new restaurants in fiscal 2010, an expansion pace which remains consistent with that disclosed previously; (3) total sales declines of between -2% and -3% in fiscal 2010, which compares to reported sales from continuing operations of $7.22 billion in fiscal 2009; and (4) more favorable costs than we anticipated in September.
"As we anticipated, sales trends within the industry improved in our fiscal second quarter as compared to the first quarter. However, sales trends were still a little more sluggish than we expected," said Brad Richmond, the Company's Chief Financial Officer. "At the same time, cost trends have been more favorable than we expected. So, while we are bringing down the range of blended same-restaurant sales we expect this fiscal year, our annual earnings per share expectations remain on track with where they were in September."
Fiscal 2009 and Fiscal 2010 Estimated Diluted Net Earnings Per Share From Continuing Operations
Diluted Net Earnings Per Share Fiscal 2009 Fiscal 2010 Estimated
------------------------------ ----------- ---------------------
52-Week Basis $2.59 $2.65 to $2.76
Impact of 53rd Week $0.06 N.A.
53-Week Basis (GAAP) $2.65 N.A.
Darden Restaurants, Inc., (NYSE: DRI) headquartered in Orlando, Fla., is the world's largest company-owned and operated full-service restaurant company with over $7.2 billion in annual sales and approximately 180,000 employees. Darden is recognized for a culture that rewards caring for and responding to people. Our restaurant brands -- Red Lobster, Olive Garden, LongHorn Steakhouse, The Capital Grille, Bahama Breeze and Seasons 52 -- reflect the rich diversity of those who dine with us. Our brands are built on deep insights into what our guests want. For more information, please visit www.darden.com.
Forward-looking statements in this news release are made under the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements could address future economic performance, restaurant openings, various financial parameters, or similar matters. By their nature, forward-looking statements involve risks and uncertainties that could cause actual results to materially differ from those anticipated in the statements. We wish to caution investors not to place undue reliance on any such forward-looking statements. Any forward-looking statements speak only as of the date on which such statements are made, and we undertake no obligation to update such statements to reflect events or circumstances arising after such date. The most significant of these uncertainties are described in Darden's Form 10-K, Form 10-Q and Form 8-K reports
(including all amendments to those reports). These risks and uncertainties include the impact of intense competition, changing economic or business conditions, the price and availability of food, ingredients and utilities, supply interruptions, labor and insurance costs, the loss of or difficulties in recruiting key personnel, information technology failures, increased advertising and marketing costs, higher-than-anticipated costs to open or close restaurants, litigation, unfavorable publicity, health concerns, including virus outbreaks and food safety, a lack of suitable locations, government regulations, a failure to achieve growth objectives through the opening of new restaurants or the development or acquisition of new dining concepts, weather conditions, risks associated with Darden's plans to expand Darden's newer concepts Bahama Breeze and Seasons 52, our ability to achieve the
full anticipated benefits of the RARE acquisition, possible impairment in the carrying value of our goodwill, or other intangible assets, risks associated with incurring substantial additional debt, a failure of our internal controls over financial reporting, disruptions in the financial markets, volatility in the market value of our derivatives and other factors and uncertainties discussed from time to time in reports filed by Darden with the Securities and Exchange Commission.
DARDEN RESTAURANTS, INC.
NUMBER OF RESTAURANTS
11/29/09 11/23/08
-------- --------
663 Red Lobster USA 655
28 Red Lobster Canada 29
--- ------------------ ---
691 Total Red Lobster 684
696 Olive Garden USA 664
6 Olive Garden Canada 6
--- ------------------- ---
702 Total Olive Garden 670
323 LongHorn Steakhouse 314
40 The Capital Grille 34
24 Bahama Breeze 23
8 Seasons 52 7
1 Other 2
--- ---
1,789 Total Restaurants 1,734
DARDEN RESTAURANTS, INC.
CONSOLIDATED STATEMENTS OF EARNINGS
(In millions, except per share data)
(Unaudited)
Quarter Ended Six Months Ended
11/29/09 11/23/08 11/29/09 11/23/08
-------- -------- -------- --------
Sales $1,641.3 $1,668.9 $3,375.3 $3,443.1
Costs and expenses:
Cost of sales:
Food and beverage 471.3 516.4 971.6 1,063.2
Restaurant labor 563.7 548.0 1,131.7 1,106.3
Restaurant expenses 257.4 276.9 524.8 565.0
----- ----- ----- -----
Total cost of sales (1) $1,292.4 $1,341.3 $2,628.1 $2,734.5
Selling, general and
administrative 169.9 146.7 341.3 317.2
Depreciation and
amortization 73.8 70.6 146.7 139.3
Interest, net 24.5 27.8 48.3 55.2
---- ---- ---- ----
Total costs and expenses $1,560.6 $1,586.4 $3,164.4 $3,246.2
Earnings before income taxes 80.7 82.5 210.9 196.9
Income taxes (19.5) (24.0) (54.8) (56.0)
----- ----- ----- -----
Earnings from continuing
operations 61.2 58.5 156.1 140.9
(Losses) earnings from
discontinued operations,
net of tax (benefit)
expense of $(0.6), $0.7,
$(1.0), and $0.5,
respectively
(0.9) 1.2 (1.5) 0.8
---- --- ---- ---
Net earnings $60.3 $59.7 $154.6 $141.7
===== ===== ====== ======
Basic net earnings per
share:
Earnings from continuing
operations $0.44 $0.43 $1.12 $1.02
(Losses) earnings from
discontinued operations $(0.01) $0.01 $(0.01) $0.01
Net earnings $0.43 $0.44 $1.11 $1.03
Diluted net earnings per
share:
Earnings from continuing
operations $0.43 $0.42 $1.10 $1.00
(Losses) earnings from
discontinued operations - $0.01 $(0.01) -
Net earnings $0.43 $0.43 $1.09 $1.00
Average number of common
shares outstanding:
Basic 139.0 137.0 138.8 138.0
Diluted 141.7 139.4 141.6 141.1
(1) Excludes restaurant
depreciation and
amortization as follows: $69.6 $66.6 $139.1 $131.0
DARDEN RESTAURANTS, INC.
CONSOLIDATED BALANCE SHEETS
(In millions)
11/29/09 05/31/09
-------- --------
ASSETS (Unaudited)
Current assets:
Cash and cash equivalents $56.9 $62.9
Receivables, net 47.6 37.1
Inventories 251.3 247.0
Prepaid income taxes 5.6 53.2
Prepaid expenses and other current assets 56.4 44.2
Deferred income taxes 107.6 110.4
----- -----
Total current assets $525.4 $554.8
Land, buildings and equipment, net 3,352.5 3,306.7
Goodwill 518.5 518.7
Trademarks 454.0 454.4
Other assets 192.3 190.6
----- -----
Total assets $5,042.7 $5,025.2
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $222.1 $237.0
Short-term debt 102.3 150.0
Accrued payroll 124.4 138.3
Other accrued taxes 54.9 60.2
Unearned revenues 125.0 138.3
Current portion of long-term debt 149.9 --
Other current liabilities 370.3 372.3
----- -----
Total current liabilities $1,148.9 $1,096.1
Long-term debt, less current portion 1,485.3 1,632.3
Deferred income taxes 298.7 297.0
Deferred rent 162.3 154.6
Obligations under capital leases, net of
current installments 58.3 58.9
Other liabilities 173.2 180.3
----- -----
Total liabilities $3,326.7 $3,419.2
======== ========
Stockholders' equity:
Common stock and surplus $2,209.1 $2,183.1
Retained earnings 2,442.1 2,357.4
Treasury stock (2,865.0) (2,864.2)
Accumulated other comprehensive income (loss) (58.1) (57.2)
Unearned compensation (12.1) (13.0)
Officer notes receivable -- (0.1)
--- ----
Total stockholders' equity $1,716.0 $1,606.0
-------- --------
Total liabilities and stockholders' equity $5,042.7 $5,025.2
======== ========
DARDEN RESTAURANTS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions)
(Unaudited)
Six Months Ended
11/29/09 11/23/08
-------- --------
Cash flows-operating activities
Net earnings $154.6 $141.7
Losses (earnings) from discontinued
operations, net of tax 1.5 (0.8)
Adjustments to reconcile net earnings to
cash flows:
Depreciation and amortization 146.7 139.3
Asset impairment 2.8 1.1
Stock-based compensation expense 23.0 17.1
Change in current assets and liabilities
and other, net (18.1) (88.8)
----- -----
Net cash provided by operating activities
of continuing operations $310.5 $209.6
------ ------
Cash flows-investing activities
Purchases of land, buildings and
equipment (214.4) (297.9)
Proceeds from disposal of land, buildings
and equipment (including assets
held for disposal) 8.8 3.0
Increase in other assets (1.0) (25.1)
---- -----
Net cash used in investing activities of
continuing operations $(206.6) $(320.0)
------- -------
Cash flows-financing activities
Proceeds from issuance of common stock 8.6 11.4
Dividends paid (69.9) (55.4)
Purchases of treasury stock (2.2) (126.7)
Income tax benefits credited to equity 1.9 3.2
(Repayment of) proceeds from short-term
debt (47.7) 283.8
ESOP note receivable repayment 0.9 3.0
Principal payments on capital leases (0.6) (0.6)
Repayment of long-term debt (0.9) (3.0)
---- ----
Net cash (used in) provided by financing
activities of continuing operations $(109.9) $115.7
------- ------
Cash flows - discontinued operations
Net cash used in operating activities of
discontinued operations (0.6) (1.7)
Net cash provided by investing activities
of discontinued operations 0.6 4.5
--- ---
Net cash provided by discontinued
operations $-- $2.8
--- ----
(Decrease) increase in cash and cash
equivalents (6.0) 8.1
Cash and cash equivalents -beginning of
period 62.9 43.2
---- ----
Cash and cash equivalents - end of period $56.9 $51.3
===== =====
SOURCE Darden Restaurants, Inc.: Financial
http://www.darden.com
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