Red Lobster sales drop hurts Darden

Written By THE ASSOCIATED PRESS Posted: 03/21/2014, 02:02am

ORLANDO, Fla. — Darden Restaurants said Friday that its fiscal fourth-quarter revenue edged down 1 percent, hurt by a sales drop at its Red Lobster chain, which it has said it plans to sell or spin off.

The revenue figure missed Wall Street expectations. Its shares fell more than 2 percent in premarket trading.

The restaurant company, whose other chains include Olive Garden, LongHorn Steakhouse and Bahama Breeze, posted revenue of $2.23 billion for the quarter ended Feb. 23. That was down from $2.26 billion in the year-ago quarter.

Analysts polled by FactSet expected $2.26 billion.

The Orlando, Fla., company also posted a quarterly profit of $109.7 million, or 82 cents per share, matching guidance that it released earlier this month. That was down almost 23 percent from year-ago earnings of $134.4 million, or $1.02 per share.

Analysts expected earnings of 85 cents per share.

Darden also said it still expects its fiscal 2014 earnings to be down between 15 percent and 20 percent from year-ago levels. Revenue at stores open at least a year, a key sales metric, are expected to fall 5.5 percent.

The results come a day after Starboard Value LP, which owns about 5.5 percent of Darden’s stock, submitted a filing to the Securities and Exchange Commission seeking to call a special shareholders meeting. Darden has urged its shareholders to reject the proposal.

At issue are Darden’s plans for its business. The company intends to hold on to and revamp its Olive Garden chain, while spinning off or selling Red Lobster. Starboard wants Darden to separate all of its large brands, including Olive Garden and LongHorn Steakhouse, from its smaller ones such as Bahama Breeze and The Capital Grille.

Browse More 'Uncategorized'