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ORLANDO-Darden Restaurants Inc. reported good news for investors during its fiscal fourth quarter results discussion on June 20, with a 4% increase in full year sales from continuing operations, mostly due to same-restaurant sales increases by Olive Garden and its Red Lobster chain holding its own. Company officials, who closed 54 of its Smokey Bones restaurants in May and plan to sell the remaining 75 establishments, say they expect to open a net gain of 40 more restaurants this year.

“This was not an easy year,” said Clarence Otis, chairman and CEO of Darden, in the conference call, while talking about the entire restaurant economy nationwide. “Many strong companies had to make tough choices. In deciding to sell Smoky Bones, we had to make a tough choice as well. But we continued to have strong growth in 2007…and we’re well-positioned entering 2008.” He said that potential buyers of the Smoky chain are being contacted.

The company reported that full-year sales from continuing operations were $5.57 billion, compared to $5.35 billion in the prior year. However, diluted net earnings per share for the fiscal year were $1.35, compared to $2.16 for the prior year. The company also closed nine of its Bahama Breeze restaurants in late April, but continues to operate the remaining 23 with plans to restart the new chain’s growth.

Same-restaurant sales for Olive Garden increased to 3.5% in the fourth quarter, said company officials in the call, and the quarter’s sales of $719.2 million were 8.2% above prior year. The officials say the increase is due to 32 net restaurants opened during fiscal 2007. Red Lobster provided less cheer, with fourth-quarter sales of $690.9 million about 1.8% below prior year, and same-restaurant sales decreasing 2.2%.

The restaurant business will likely stay at about the same levels this year, said the Darden officials in the call. With all things being equal, the company says Olive Garden has the potential for up to 900 restaurants in North America, a new Red Lobster prototype is on its way, and more Bahama Breeze restaurants are planned by 2008. Otis even speculated on future new offerings.

“We believe we can leverage more growth, by that I mean additional brands,” Otis said in the call. “Our business is to drive shareholder value, that shows that now we’re a $6 billion company versus when we came out from General Mills a few years ago at $3.2 billion. If we had just tried to maintain our two brands, that would have meant a lower total shareholder value.”

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