Red Lobster slump costs Darden in 2Q
Darden Restaurants reported a 37 percent drop in net earnings per share in its second quarter results, in part due to a decline in profits at the company’s Red Lobster and LongHorn Steakhouse restaurants.
Earnings per share from continuing operations stood at 26 cents in Q2, which is down 37 percent from the 41 cents per diluted share in the second quarter of 2011. Sales were up slightly, from USD 1.83 billion (EUR 1.39 billion), but earnings from continuing operations went down from USD 54.1 million (EUR 41 million) in 2011 to USD 33.7 million (EUR 25.5 million) in Q2 of 2011.
U.S. same-restaurant sales decreased in all three major Darden chains — 0.8 percent for LongHorn Steakhouse, 2.7 percent for Red Lobster, and 3.2 percent for Olive Garden. Both Red Lobster and LongHorn showed a decrease in operating profit, and a decrease in operating profit as a percentage of sales. Olive Garden had a decrease in operating profit as a percentage of sales, too, but lower food and beverage costs managed to help that chain post an increase in operating profit.
The company’s report also showed that the acquisition of Yard House USA, which happened over the summer of this year, also affected net earnings.
Despite the decline, Darden indicated a positive financial outlook for 2013, with an estimated total sales growth of between 7.5 and 8.5 percent.