AP News

Earnings Preview: Darden to report 1st-qtr results

NEW YORK (AP) — Darden Restaurants Inc. fiscal first-quarter results, due out Friday, should give a glimpse at the company's efforts to revive struggling sales at its flagship Olive Garden and Red Lobster restaurants.

WHAT TO WATCH FOR: In the previous quarter, Darden said sales at restaurants open at least a year fell at both Olive Garden and Red Lobster. The metric is a key indicator of the company's health, because it strips out the effect of newly opened and closed stores and reflects growth at continuing locations.

The company attributed the drop at Olive Garden to the failure of its marketing to underscore the restaurant's value offerings. At Red Lobster, it noted that a price hike for a popular special wasn't well received. Darden has said it would adjust its marketing approach to emphasis value, particularly in light of the challenging economic climate.

More broadly, executives noted that Olive Garden's menu had failed to keep pace with evolving customer preferences. A new core menu and advertising campaign are slated for this fiscal year.

WHY IT MATTERS: Darden, based in Orlando, Fla., is the country's largest full-service restaurant operator. Olive Garden, which is its biggest chain, accounts for almost half its revenue.

Based on the long-term prospects for its brands, the company plans to accelerate growth in its fiscal 2013, with about 100 net new restaurants. The company also operates Longhorn Steakhouse, The Capital Grille and Bahama Breeze.

LAST YEAR'S QUARTER: Darden earned $106.6 million, or 78 cents per share. Revenue was $1.94 billion.

WHAT'S EXPECTED: Analyst, on average, expect a profit of 83 cents per share, on revenue of $2.03 billion.

Steve Ballmer, Power Forward
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