Strong Traffic Lifts Darden Above Forecasts

Darden Restaurants Inc. posted fiscal 2008 first-quarter earnings of $105.9M ($0.73/share) on revenue of $1.47B, up from $88.5M ($0.62/share) on revenue of $1.36B a year earlier, and topping analysts' expectations for earnings of $0.70/share and revenue of $1.46B. Including losses from discontinued operations of a penny a share, earnings for the period were $0.72/share vs. $0.59/share a year ago. Contributing to the gains were strong sales at the company's Red Lobster and Olive Garden chains where same-restaurant sales rose 7% and 4.8%, respectively, from prior year levels. "They appear to be executing better than most in casual dining," said one analyst. The company reiterated its outlook for total sales growth of 6-7% and EPS growth of 10-12%, excluding charges related to its pending acquisition of RARE Hospitality. Same-restaurant sales for Red Lobster and Olive Garden are expected to rise 2-4%. It also indicated that beginning with the fiscal second quarter, it no longer intends to report same-restaurant sales on a monthly basis, but will do so rather only as part of its quarterly results.

Sources: Press Release, The Street.com, Reuters
Commentary: Take a Bite Out of Darden Restaurants • Darden Works To Overcome Growth Challenge
Stocks/ETFs to watch: DRI. Competitors: PFCB, EAT, APPB, CAKE

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