Darden Restaurants, Inc.
) announced preliminary results for first-quarter fiscal 2015,
which were largely in line with expectations. The company expects
to release first-quarter results on Sep 12, 2014, before the market
The company expects earnings per share from continuing operations,
on an adjusted basis to be within 31 to 33 cents for its fiscal
first-quarter 2015 ended Aug 24, 2014. The Zacks Consensus
Estimate of 33 cents is in line with the higher end of the
However, net loss per share from continuing operations is expected
to be approximately 13 to 15 cents. This includes certain one-time
items related to the sale of Red Lobster, costs related to certain
aspects of the company's strategic action plan, restaurant
impairment charges and around debt breakage expenses.
The company expects U.S. comps for LongHorn Steakhouse and
Specialty Restaurant Group to grow roughly 2.8% and 2.1%,
respectively, in the first quarter. Specialty Restaurant Group's
comps growth will mainly be driven by comps growth of roughly 3.9%
for The Capital Grille, 2.5% for Eddie V's, 2.3% for Yard House and
1.1% for Bahama Breeze, partly offset by comps decline of 0.3% for
However, comps are expected to decline 1.3% for Olive Garden.
Fiscal 2015 Financial Outlook
Darden continues to expect earnings per share from continuing
operations of $1.81 to $1.90 for fiscal 2015. This projection
includes the costs associated with implementation of its strategic
action plan and debt breakage costs, besides certain one-time items
related to the sale of Red Lobster.
On an adjusted basis, the company expects earnings per share from
continuing operations of $2.22 to $2.30 for 2015. The Zacks
Consensus Estimate for fiscal 2015 is pegged at $2.22, at the lower
end of the range.
These expectations reflect the company's projection that comps
growth for fiscal 2015 for Olive Garden will be in the range of
stable to up 1%, LongHorn Steakhouse is expected to grow 1-2% and
the Specialty Restaurant Group is anticipated to grow roughly 2%.
The company also plans to open 37 restaurants in the fiscal
Olive Garden Brand Renaissance Plan
Darden also announced progress on its Olive Garden Brand
Renaissance Plan, including improvement in guest satisfaction
across its restaurants. Further, the company announced the
completion of three remodels that involve a new logo and new
signage, menus and plates.
This has resulted in more than 10% increase in traffic, on an
average, in the remodeled restaurants. The company plans to remodel
another 75 restaurants in fiscal 2015. Olive Garden's take-out
business has also witnessed a 13% year-over-year increase during
the first quarter, due to the company-wide rollout of online
ordering. The company also noted that testing of tablet technology
in several restaurants has generated check growth, increased table
turns and tip percentage for servers.
Darden currently carries a Zacks Rank #3 (Hold). Some better-ranked
stocks worth considering in the restaurant industry include BJ's
Restaurants, Inc. (
), Chipotle Mexican Grill, Inc. (
) and Jamba, Inc. (
). All these stocks sport a Zacks Rank #1 (Strong Buy).
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