Darden Restaurants, Inc. (NYSE:DRI), the parent company of some of the well-known brands including Olive Garden, Longhorn Steakhouse, and Red Lobster reported weak first quarter financial results for the fiscal 2014.
Darden Restaurants decline in earnings
The company suffered a 37.6 percent decline in net earnings from continuing operations after generating $70.3 million or $0.53 per share. During the same period a year earlier, Darden Restaurants, Inc. (NYSE:DRI) recorded $111 million net earnings or $0.85 per share.
The full-service restaurant operator delivered $2.16 billion total sales, up by 6.1 percent from $2.03 billion a year ago. During the quarter, the same store restaurant sales of Olive Garden, Red Lobster, and Longhorn Steakhouse dropped by 3.3 percent, which offset the 0.5 percent same-store restaurant sales growth of the specialty restaurant group of Darden Restaurants, Inc. (NYSE:DRI).
Clarence Otis expectations for sales
In a statement, Clarence Otis, chairman and chief executive officer of Darden Restaurants, Inc. (NYSE:DRI) said the company “expects sharper sales volatility” because the slow growth and uneven recovery of the economy persists. He said, “August was a challenging month on an absolute basis, and we have to be prepared for consumers to continue to be cautious in their spending.”
Otis added that the sales volatility of Darden Restaurants, Inc. (NYSE:DRI) was amplified because of the changes on its two largest brands. He said, “We are working to improve affordability and to refine the guest experiences we provide so that they remain responsive to what guests want beyond affordability.”
Darden annual cost reduction
Darden Restaurants, Inc. (NYSE:DRI) plans to reduce its annual operating costs by $50 million by reducing its workforce and spending cuts. The company projected that the company will save $25 million in fiscal 2014 from these measures.
The board of directors of the company also approved a quarterly dividend of $0.55 per share.
The company also announced the retirement of its president and chief operating officer, Drew Madsen by the end of its fiscal second quarter. Gene Lee the current president of Darden’s specialty restaurant group will replace Madsen immediately following his retirement.
“While we respect and understand Drew’s decision to retire, he will be sincerely missed as a colleague and friend,” said Otis.
The stock price of Darden Restaurants, Inc. (NYSE:DRI) declined by 6 percent to $46.30 per share on Friday around 1:24 P.M. in New York.