Bad weather bites Olive Garden, Red Lobster
ORLANDO, Fla. (AP) - The parent company of Olive Garden and Red Lobster said bad winter weather, along with expenses related to its plan to split off its Red Lobster chain, hurt its third-quarter net income.
Darden Restaurants Inc., which is based in Orlando, Fla., said Monday that it expects to earn about 82 cents per share for the quarter ended Feb. 23. Analysts, on average, expect a profit of $1.02 per share, according to FactSet.
Darden said the exceptionally rough winter weather reduced earnings in the quarter by about 7 cents per share. Legal, financial advisory and other costs related to the plan to either spin off or sell Red Lobster lowered its profit by 6 cents per share.
The company said it expects to post an 8.8 percent drop in revenue at Red Lobster restaurants open at least a year, while the metric is expected to drop 5.4 percent for Olive Garden restaurants and rise 0.3 percent at LongHorn Steakhouse locations.
Combined U.S. same-restaurant sales for the company's specialty restaurant group are expected to be down 0.7 percent.
The metric is a key measure of a retailer's health, because it excludes revenue at locations that recently opened or closed.
Darden attributed the revenue drops to the more severe winter weather and an unfavorable shift in the timing of Thanksgiving. Excluding those factors, Darden said Red Lobster stores would have posted a decline of about 6.2 percent, while Olive Garden revenue at stores open at least a year would have fallen 2.8 percent and risen 2.9 percent at LongHorn Steakhouse locations. The specialty restaurant group would have posted a 1.9 percent increase.
The company backed its previous outlook for fiscal 2014, saying that it still expects earnings per share to decline 15 percent to 20 percent, excluding restructuring costs.
In premarket trading Monday, its shares fell $1.33, or 3 percent, to $49.73.
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