Red Lobster owner Darden Restaurants foresees a better than expected 2010. (Photo: Darden)

Darden Restaurants ups 2010 outlook

UNITED STATES
Thursday, February 18, 2010, 15:30 (GMT + 9)

Owner of the Red Lobster and Olive Garden chains Darden Restaurants Inc increased its profit outlook for 2010 on Tuesday. It cited improving consumer traffic and a more than 4 per cent rise in its shares.

Darden foresees that its earnings per share will climb from 5 to 8 per cent from continuing operations for the year ending in May, it said, which is a jump from a December outlook of flat to a maximum of 4 per cent.

"The signs of sales and traffic improvement we began to see late in the second quarter and discussed during our December conference call with investors continued into January and February," CEO Clarence Otis stated, Reuters reports.

Based on last year’s results, the new outlook suggests a profit range of USD 2.78 to USD 2.86 per share. Analysts polled by Thomson Reuters I/B/E/S had expected USD 2.74.

In December, Darden expected this year’s earnings to be between USD 2.65 and USD 2.76 per share. Company officials said at that time they perceived early signs of recovering consumer attitude and spending.

Florida-based Darden also told that it anticipated sales at stores open at least 18 months to fall by 3 per cent this year, while previously it had expected a drop of 3 to 4 per cent.

The company also disclosed its initial forecast of third-quarter earnings per share from continuing operations at 91 cents to 93 cents, in contrast with analysts’ expectations of 80 cents for the period ending on 28 February. Darden will announce the results on 23 March.

Blended third-quarter same-store sales are forecast to fall by 0.5 per cent to up 0.5 percent. Darden speculates those results up 1 to 1.5 per cent at Olive Garden and down 1 to 1.5 per cent at Red Lobster.

The company expects same-store sales to rise by 0.5 to 1 per cent at LongHorn Steakhouse and to dive by 2.5 to 3 per cent at the Capital Grille, restaurant chains that it also owns. It also said that the Thanksgiving holiday week shift should heighten its blended same-store sales results by some 80 basis points in the third quarter.

Darden also asserted expectations to add 50 to 55 new stores on a net basis for 2010. It will host an analysts' meeting in New York on Wednesday.

Related article:

- Darden Restaurants gets 'stable' rating

By Natalia Real
[email protected]
www.seafood.media

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