Darden Beats the Street With 3Q Profit of $66.2M

In last year's fiscal third quarter, Darden's earnings after tax were $49.5 million or 40 cents per diluted share on sales of $988.6 million. The company's quarter ended Feb. 24.

At the same time the company was announcing third-quarter results, Darden directors also approved a three-for-two stock split in the form of a 50% stock dividend to holders of record on April 10 and payable May 1. Cash will be paid in lieu of fractional shares.

The company's common on the New York Stock Exchange closed March 22 at $37.82 per share, down 34 cents from $38.16 on March 21. Darden's 52-week high-low is $44.65 and $22.85. The company has 117 million shares outstanding.

In a prepared statement, Darden chairman/CEO Joe R. Lee calls the third-quarter production "extraordinary." He says the company had "all-time third-quarter highs in sales and earnings, despite the economic and social uncertainty the nation continued to face."

Lee calls the casual seafood restaurant business "a strong industry" with Darden leading rivals by using "a powerful combination of the right brands, strategies and people to offer consumers excellent dining experiences at great value."

He attributes a portion of the company's third-quarter sales to a $12.99 all-you-can-eat shrimp meal Darden promoted heavily for its Red Lobster division. Reb Lobster's third-quarter sales of $613 million were 13.6% above the prior year, driven by its 12% increase in same-restaurant sales. This was the company's 17th consecutive quarter of same-restaurant sales growth.

Olive Garden's third-quarter sales of $481.2 million were 13.9% ahead of last year, propelled by strong same-restaurant sales growth.

The Bahama Breeze restaurant division opened a new restaurant in Troy, MI during the quarter and now operates 26 restaurants in 17 markets. Three more new restaurants are scheduled to open in the fourth quarter.

Smokey Bones BBQ Sports Bar opened four new locations for a total 16 restaurants. Two additional restaurants are scheduled to open this fiscal year.

Darden continued its buyback of common stock, purchasing 2.8 million shares in the third quarter. Since the repurchase program began in December 1995, the company has repurchased 57.5 million shares from a total authorization of 64.6 million shares.