Boston, MA 10/03/2014 (wallstreetpr) – Darden Restaurants, Inc. (NYSE:DRI) President and Chief Operating Officer, Gene Lee, said that the growth in September same-restaurant sales indicated operational improvements taking a firm hold. The company also lifted second quarter earnings above the Wall Street analysts’ estimations. This favorable news assumes importance in the wake of a shareholder meeting scheduled for next week.
Same-Restaurant Sales
According to the company’s statement, its flagship brand Olive Garden, witnessed 0.6% uptick in same-restaurant sales in September on top of a 2.6% drop in the year-ago month. Similarly, while its LongHom Steakhouse brand witnessed 3.2% growth, The Capital Grille same-restaurant sales advanced 6.4% in September over the last year month. The two brands achieved 2.9% and 1.5% uptick respectively in the previous year month’s same-restaurant sales.
Its Yard House and Seasons 52 brands also recorded 3.8% and 1.3% growth in same-restaurant sales in September. The two brands’ results were in contrast to the de-growth of 0.6% and 3.2% respectively in the prior year September month. However, its Bahama Breeze witnessed 30 basis points fall in its September same-restaurant sales on top of a 1.7% uptick in the year-ago month.
2Q Outlook
Darden Restaurants, Inc. (NYSE:DRI) said that it estimated its adjusted earnings from continuing operations to be at the higher end of its earlier outlook of 26 – 28 cents a share for the second quarter. The updated earnings guidance suggests that it would easily surpass the Wall Street analysts’ earnings predictions of 26 cents a share.
Proxy Challenge
The company would have to face a proxy challenge in the next week’s annual meeting of the shareholders from activist shareholder, Starboard Value. The activist blamed the company’s management for the fall in restaurant sales.
However, Darden Restaurants, Inc. (NYSE:DRI) management differed from the activist’s view and pointed out that it has commenced a turnaround plan, which required some time to make changes. The company’s improved results in August, as well as, September should reduce the tone of the activist investor if not silence him.
