Strong Sales Fuel Darden

The locally based company, which owns and operates more than 1,400 restaurants under the Bahama Breeze, Seasons 52 and Smokey Bones restaurants in addition to Red Lobster and Olive Garden banners, said net earnings increased to $92.31 million, or 60 cents per share, from $84 million, or 52 cents per share, for the same quarter a year earlier. Sales for the quarter were $1.51 billion, up from $1.39 billion for the same quarter a year ago.

The casual-dining giant said net earnings for the year rose to $338.19 million or $2.16 per share, up from $290.61 million or $1.78 per share in 2005. Fourth-quarter sales were strongest at Red Lobster, where sales of $703.3 million were 10.7% higher than in the prior year period. Olive Garden's quarterly sales of $665 million were up 6.1%, primarily due to 19 new restaurant openings during fiscal 2006 and a 2.5% increase in domestic same-restaurant sales.

Darden Restaurants said it plans to open 30 to 35 new Olive Garden restaurants this year, almost double the 19 ones it opened under that brand during fiscal 2006. For the year, the company opened a total of 47 new establishments. In addition to the 19 Olive Gardens, 22 Smokey Bones, three Red Lobsters and three Seasons 52 restaurants were developed. At Bahama Breeze, which had no new restaurant openings during the year, fourth-quarter sales rose 3.6% to $46.4 million, while at Smokey Bones, fourth-quarter sales of $89.8 million were 8.7% above the same period in 2005.

Darden Restaurants President and COO Drew Madsen said the company plans a major repositioning of its Smokey Bones operations. It will include menu changes and a possible name change, after same-store restaurant sales declined 7.7% during the fourth quarter.

"Smoky Bones had a difficult year because of a challenging consumer environment," Madsen said. "Plans are in place to address its key issues and new restaurant growth will be reduced until performance improves." Madsen said the company will open only five Smokey Bones restaurants next year while it repositions the brand.

Company officials said they expect overall sales among all of its chains to grow between 5% and 7% during fiscal 2007 with diluted net earnings per share growth of 13% to 14%, excluding stock option compensation expenses.