Caught this on the news wire today. Darden has a nice employee stock purchasing plan that if you aren't participating in (as an employee) then you are throwing away free money. Even if you don't plan on staying with the company or keeping the stock, the option is a great thing to take advantage of.
But unfortunately the reduction in costs talked about below does nothing for the server's bottom line at the end of the night.
By Lisa Baertlein
LOS ANGELES, Sept 29 (Reuters) - Darden Restaurants Inc (DRI.N), owner of the Olive Garden and Red Lobster chains, warned that full-year same-store sales could fall more than expected and that its profit could be at the low end of its forecast, and its shares fell 6 percent.
Darden, which posted a first-quarter profit a penny above Wall Street expectations, is forecasting earnings of $2.59 to $2.85 per share for fiscal 2010.
"Given industry sales trends, however, at this time the lower half of the diluted net earnings per share range we've provided is more likely than the upper half of the range," the company said in a statement.
The restaurant industry has been hurt by rising unemployment and falling home prices, prompting consumers to reduce the number of times they go out to eat and to order lower-priced items.
Oppenheimer restaurant analyst Matthew DiFrisco said Darden was being cautious in its forecast.
"They're being conservative saying that (earnings) would be skewed toward the lower end," DiFrisco said.
Darden has been benefiting from lower food costs that helped offset weak sales.
Darden, which also owns Capital Grille and LongHorn Steakhouse, said earnings from continued operations were $95 million, or 67 cents per share, for the first quarter ended Aug. 30, compared with $82.4 million, or 58 cents per share, a year earlier.
Analysts, on average, were looking for 66 cents per share, according to Reuters Estimates.
Total sales from continuing operations fell 2.3 percent to $1.73 billion during the quarter, as sales at U.S. established restaurants fell 2.9 percent at Olive Garden, 7.9 percent at Red Lobster and 6.2 percent at LongHorn Steakhouse.
Darden said sales were softer than anticipated during the first quarter, causing it to reduce the lower end of its full-year forecast for sales at established restaurants.
The restaurant company now expects combined U.S. same-store sales at Red Lobster, Olive Garden and LongHorn Steakhouse to be flat to down 3 percent in fiscal 2010, a range that is one percentage point lower on the bottom end than the previously issued forecast.
Shares of Darden fell to $33.99 from their New York Stock Exchange close of $36.15.