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Darden’s Fourth-Quarter Profit Rises, But Same-Unit Sales Falter

June 22, 2012

Darden Restaurants reported a net earnings increase of 10% for its fiscal fourth quarter ended May 27 to $151.2 million, up from $137.4 million in the year-earlier period. Group sales were up 3.8%, reflecting Darden’s addition of 89 new restaurants. But same-restaurant sales in the U.S. were down by 1.9%. Sales at the company’s Olive Garden brand, which accounts for nearly half of company revenue, fell by 1.8% from the year-earlier period, while Red Lobster was down 3.9%. Sales at Darden’s LongHorn Steakhouse rose by 3%.

“From a sales perspective, growth in the fourth quarter was below expectations, due largely to same-restaurant sales declines at both Olive Garden and Red Lobster that reflected less effective than anticipated nationally advertised promotions,” said Darden chief executive Clarence Otis. “We believe the business environment in fiscal 2013 will be similar to that in fiscal 2012, with slow and uneven recovery in both the economy and our industry.”

Darden has been trying to push growth at Olive Garden through value-focused advertising and an affordable menu. Darden also owns and operates The Capital Grille, Bahama Breeze, Seasons 52 and Eddie V’s restaurant brands.

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