Darden Restaurants Inc., which is the owner of Red Lobster and Olive Garden chains, made an official statement, revealing that its net profit for the fourth quarter declined by 35%. The company also projected annual earnings that trailed median analysts forecasts.
According to the companys statement, its quarterly net income fell from 133.2 million dollars, or 1.01 dollars per share a year ago, to 86.5 million dollars, or 65 cents a share.
Darden Restaurants Inc. also made a forecast for its further performance. The companys Chief Financial Officer Mr. Brad Richmond explained that it expects a profit from continuing operations this fiscal year that amounts to 2.30 dollars a share. The projection trails analysts estimates of 2.51 dollars.
One of the analysts, who works at Sanford C. Bernstein – Ms. Sara Senatore – wrote in a research note, which was cited by Bloomberg: “The key metric – comps at Olive Garden – continued to disappoint, suggesting that the core business remains in a difficult position.”
Recently, the company has been facing some difficulties due to falling sales and increased competition. Last month, the company officially revealed that it plans to sell its Red Lobster chain to the private-equity firm Golden Gate Capital in a deal valued at 2.1 billion dollars. Darden Restaurants had announced its intentions to separate the unprofitable chain from its other businesses, but the pending sale of the companys chain was reported to have narrowed its profit by 19 cents a share. The sale is expected to be finalized by the end of the first fiscal quarter.
The company revealed that the same-restaurant sales of its Olive Garden brand have been relatively weak in the conditions of fierce rivalry, which led to a 3.4% decline over the fourth quarter that ended May 25th.
Darden Restaurants Inc. was 3.92% down to close at 47.58 dollars per share yesterday, marking a one-year change of 5.07%. According to the information published on CNN Money, the 22 analysts offering 12-month price forecasts for Darden Restaurants Inc. have a median target of 52.00, with a high estimate of 60.00 and a low estimate of 45.00. The median estimate represents a +9.29% increase from the last price of 47.58.
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