Boston, MA 09/23/2013 (wallstreetpr) – On Friday, Darden Restaurants, Inc. (NYSE:DRI) reported its quarterly profit which far lower than expected. Consumers have been tightening their purse strings and this is one factor that does not seem to be changing in a hurry. Its flagship Red lobster and Olive chains have taken a major hit.
Friday’s trading
In Friday’s trading Darden Restaurants, Inc. (NYSE:DRI) stock dipped by 7.14%. The opening price of the shares was $47.47 which rose to an intraday high of $47.83 and closed at $45.78. Approximately 6.34 million shares were traded on Friday. An average volume of 1.50 million shares were traded over 30 days.
The quarter
Darden Restaurants, Inc. (NYSE:DRI) said that its net income had dropped to $70.2 million or 53 cents/share in the Q1 that ended 25 August. In comparison the net income had been $110.8M or 85 cents /share in the same quarter in 2012. The average analyst projection had been earnings per share of 70 cents.
Numerous reasons
Several reasons have been cited for the downslide. The economy has been very shaky and taxes have been on the rise. Lower-cost meals are what customers are opting for. Darden Restaurants, Inc. (NYSE:DRI))’s restaurant patrons are from the middle-income group and this is the class that has been hit badly and the trends of eating out have changed greatly. The LongHorn Stakehouse chain is also a Darden Restaurants, Inc. (NYSE:DRI)
Enterprise. Its business has also been hit very badly.
Dip in sales will continue
Clarence Otis, Darden Restaurants, Inc. (NYSE:DRI)’s Chief Executive officer said that that he expects the volatility in sales to rise even further and that consumers will continue being thrifty. In the quarter, there was a 4% drop in sales at Olive Garden restaurants that had been operational for at least 16 months. Typically, these used to account for 50% of the company’s overall revenue. There was also a 3.3% drop in the total same-restaurant sales at Red Lobster, olive Garden and LongHorn Stakehouse.
