Higher Cost Hurts Darden’s Q4 Profit, Shares Edge Lower (DRI)
Darden Restaurants Inc. (NYSE: DRI) said on Friday that its fiscal fourth quarter profit fell 12% as margins were hurt due to higher food, beverage and labor costs, offsetting double digit sales growth.
For the new fiscal year, the Orlando Florida-based Company expects earnings growth of 4% to 6%, on assumption that sales would grow by 6% to 8% while analysts polled by Thomson Reuters had most recently forecasted for earnings growth of 1% on 7% rise in revenue.
In order to expand its traction, Darden Restaurants is now making a transition towards becoming more of a specialty restaurant group by focusing on high end dining chains like Bahama Breeze and Capital Grille.
For the fiscal fourth quarter ended May 26, Darden reported net income of $133.2 million or $1.01 a share, against a profit of $151.2 million or $1.15 a share, in the same quarter of last fiscal year.
Sales climbed 11% to $2.3 billion, aided by addition of 44 Yard House Restaurants.
Analysts were expecting earnings of $1.03 on sales of $2.27 billion.
Same-restaurant-sales increased 2.3%. Chain wise, same-restaurant-sales edged up 1.1% at Olive Garden, rose 3.2% at Red Lobster while it increased 3.5% at LongHorn. Consolidated same-restaurant-sales rose 2.2%.
Operating expenses and total costs soared 15% to $2.14 billion. Prices of food and beverages climbed 12% while labor costs jumped 14%.
Meanwhile, the Company also announced that its Board approved increasing the quarterly dividend to 55 cents from 50 cents.
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Post Written By: Ed Liston
Ed Liston is a senior contributing editor at TheStockMarketWatch.com. An active market watcher and investor, Ed guides an independent team of experienced analysts and writes for multiple stock trader publications. He is widely quoted in various financial publications on the Internet. When Ed is not writing about stocks, investing in stocks, talking about stocks, or otherwise doing something stock related, he likes to go sailing and fishing in his yacht.
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