Tuesday afternoon, Darden Restaurants parent of the Red Lobster and Olive Garden chains announced first-quarter net income of $105.9 million, or 72 cents per share. This is a notable 18% advance from year-ago results of $88.5 million, or 59 cents per share. Earnings from continuing operations totaled 73 cents per share, 3 cents above analysts' expectations.
Sales were 8% higher at $1.47 billion, edging out Wall Street's consensus view. Olive Garden same-store sales were up 4.8% in the reporting period; Red Lobster saw comparable-store sales rise 7%.
Darden officials took the opportunity to reiterate their 2008 outlook. Sales growth from existing businesses is expected to rise between 6% and 7%. Comparable-store sales at both Red Lobster and Olive Garden are expected to grow by 2% to 4% in fiscal 2008. Earnings growth during the year is expected to rise between 10% and 12%, excluding charges, to $2.78 to $2.83 per share in profit.
Responding to this earnings news, J.P. Morgan analyst John Ivankoe reiterated his overweight rating on the stock, noting competitive sales trends at Olive Garden and improving results at the Red Lobster chain.
In pre-market trading, DRI shares have risen 1.3%. This week, the shares have muscled above their 20-week moving average. If the stock manages to close the week above its 10-week and 20-week trendlines, it will be the first such weekly finish since August 3.