BUSINESS

Darden Restaurants 1Q profit, revenue up as key revenue metric edges down for flagship chains

09/21/2012 08:00 EDT | Updated 11/21/2012 05:12 EST
ORLANDO, Fla. - Darden Restaurants' fiscal first-quarter net income rose 4 per cent even as it struggled to grow key revenue figures at its Olive Garden and Red Lobster chains.

Its earnings beat Wall Street expectations, and its shares edged up in premarket trading.

The Orlando, Fla.-based company earned $110.8 million, or 85 cents per share, in the three months ended Aug. 26 compared with $106.6 million, or 78 cents per share, a year ago. Earnings from continuing operations were 87 cents per share.

Analysts expected earnings of 83 cents per share, according to a FactSet survey.

Shares of Darden rose 28 cents to $55 before the market open. That would take it close to its 52-week high of $55.84 set in mid-May.

Revenue rose 5 per cent to $2.03 billion from $1.94 billion a year ago, meeting Wall Street's expectations.

Darden Restaurants Inc. said Friday that combined revenue at Olive Garden, Red Lobster and LongHorn locations open at least a year dipped 0.3 per cent.

This metric is a key indicator of health because it strips out the impact of newly opened and closed locations.

In the U.S., revenue at Olive Garden locations open at least a year edged up 0.3 per cent while falling 2.6 per cent at Red Lobster and climbing 3.6 per cent at LongHorn Steakhouse.

Olive Garden is Darden's biggest chain and accounts for about half of its revenue.

The company maintained its fiscal 2013 forecast. It still expects earnings from continuing operations will climb 5 per cent to 9 per cent and revenue will increase 9 per cent to 10 per cent.

Combined revenue at Olive Garden, Red Lobster and LongHorn locations open at least a year in the U.S. is still anticipated to rise 1 per cent to 2 per cent.

Darden also declared a quarterly dividend of 50 cents per share. The dividend will be paid on Nov. 1 to shareholders of record on Oct. 10.

The company owns and runs more than 2,000 restaurants and has more than 185,000 employees.