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Fri, Sep 21 2012 00:00:00 E
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Improved sales at Olive Garden eateries helped boost Darden Restaurants‘ (DRI) first-quarter profit above Wall Street estimates.
Darden reported its earnings rose 9% rise from a year ago to 85 cents a share, beating estimates by a penny. Sales increased 4.6% to $2.03 billion, in line with estimates.
Shares climbed 4% to 57.10 in midday trading.
Red Lobster’s “margins expanded, Olive Garden had meaningful sales and margin improvement and LongHorn Steakhouse and the Specialty Restaurant Group continued to have good sales momentum,” CEO Clarence Otis said. “We also benefited from our diverse food basket, with a decline in seafood costs on a year over year basis moderating the significant spike in the cost of beef.”
Olive Garden revamped its menu to focus on lighter fare and offer better deals to compete with cheaper restaurant options like McDonald’s (MCD) and Chipotle Mexican Grill (CMG). Sales at the Italian-style restaurant chain rose 4.3% to $922 million. Red Lobster sales rose 2.1% to $660 million.
Darden declared 50 cent a share quarterly dividend and reaffirmed its full year sales forecasts of 9%-10% growth.
The Retail-Restaurant group is ranked No. 48 out of Investor’s Business Daily’s 197 industry groups.
Panera Bread (PNRA), No. 41 on the IBD 50 list, leads the group with a composite rating of 98.
On Wednesday, casual dining restaurant chain Cracker Barrel (CBRL) reported a 46% rise in Q4 profit.
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