There were a million reasons for Darden Restaurants
I can keep going, but what's the point? It's like shooting fish in a barrel. Or, to keep things in terms that the parent of Red Lobster and Olive Garden could appreciate, it's like shooting lobsters in a crate or garlic breadsticks in a basket.
So what happens when the casual dining giant defies a laundry list of reasons why it should fail, delivering better-than-expected results? Well, I start by bowing my head in shame for assuming the worst, before breaking out in a round of applause.
Earnings from continuing operations climbed 7% to $0.72 a share at Darden during the period. Add back items related to its recent acquisition of LongHorn Steakhouse and Capital Grille parent RARE Hospitality, and earnings would have clocked in at $0.78. Wall Street was looking for an adjusted profit of only $0.75 a share. As rough a year as this has been for the dining hospitality industry, Darden still managed to top analyst guesstimates in three of its fiscal year's four quarters.
Sales for the period rose 25% to $1.83 billion. That is also slightly ahead of the market's top-line target of $1.82 billion, but don't let the heady growth trick you. A good chunk of that growth spurt is the result of the RARE Hospitality purchase that closed back in October.
However, Olive Garden's comps did rise an amazing 5.8%. The casual Italian concept has now rattled off 55 straight quarters of year-over-year sales growth at the unit level. These streaks are getting harder to come by in these turbulent times. Chains like DineEquity's
Olive Garden's success also comes at a time when other Italian concepts like California Pizza Kitchen
Darden's guidance for fiscal 2009 is upbeat. The company is looking for sales and earnings to inch 14% to 15% higher in its new year. Then again, the first half of the year will have the favorable comparison to when it had yet to acquire RARE. Fiscal 2009 will also have an extra week.
Still, why nitpick? Darden had so many crutches to lean on, and managed to rise above it.