ORLANDO Fla. Despite what the company called a “challenging economic environment,” Darden Restaurants Inc. on Monday reported that its third-quarter, per-share earnings are expected to come in above expectations because of positive same-store sales at its largest chains, Red Lobster, Olive Garden and LongHorn Steakhouse.
The news sent the company’s shares up more than 7 percent in trading on Monday, as investors and analysts rewarded the company for being one of few restaurants able to meet — and exceed — expectations in the midst of a general malaise surrounding the sector.
The casual-dining giant said it expected earnings per share from continuing operations for its quarter ending Feb. 24 to range between 78 cents and 80 cents. Analysts, on average had expected earnings of 77 cents, according to a survey by Thomson Financial. A year ago, Darden posted per-share earnings of 72 cents per share.
The latest company estimate included about 5 cents per share in costs related to the acquisition and integration of Rare Hospitality International Inc., which was parent to LongHorn Steakhouse and The Capital Grille and was purchased by Darden last October for about $1.4 billion.
Darden said blended U.S. same-store sales for the Red Lobster, Olive Garden and LongHorn Steakhouse chains were up 1.2 percent so far this quarter, through Feb. 10. For the full year, blended same-store sales were up 2.6 percent so far, versus the same period a year earlier.
Darden operates about 1,738 restaurants. Its other brands include Bahama Breeze and Seasons 52.
“In a challenging economic environment, guests continue to show their loyalty to Darden’s brands,” Clarence Otis, chairman and chief executive, said in a statement. “As a result, we feel confident that for the third quarter and balance of the year, the talented teams operating our brands and managing our supply chain will be able to deliver the competitively strong sales and earnings results we are outlining today.”
Darden also affirmed its expectations for full-year earnings growth of between 2 percent to 4 percent, based on a combined U.S. same-store sales jump of between 2 percent and 3 percent.
The company, which plans to release its full fiscal third-quarter results on March 1, is holding an analyst and investor meeting tomorrow in New York City.