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Olive Garden, Red Lobster Still Looking To Turn Things Around

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By Zacks.com, Contributor

Have you eaten at an Olive Garden lately? Fewer people are. Darden Restaurants (DRI) has been struggling to turn around its flagship Italian restaurant chain while sales are also down at its Red Lobster and LongHorn Steakhouse chains. Earnings are expected to slide 12.1% in fiscal 2013 while it attempts to right the ship. Darden operates 2,000 of the most recognizable casual dining restaurants in the United States, including Olive Garden, Red Lobster, LongHorn Steakhouse, Bahama Breeze and the Capital Grille. Olive Garden, its flagship restaurant, hit a rough patch in recent years as a stale menu and higher prices turned consumers off. The company has been forthright in acknowledging the problems, though, and is making changes, including remodeling old restaurants and offering new menu items. Although, the changes won’t come soon enough to save this fiscal year. In February 2013, Darden shocked analysts with a bearish outlook for its fiscal third quarter. It projected same store sales down 4.6% with all three of its main restaurant brands getting hit hard. It also offered third quarter EPS guidance between $1.00 and $1.02, which was much lower than the Zacks Consensus Estimate of $1.13. In response, all the analysts cut their estimates for the quarter and the full fiscal year. The Zacks Consensus for Fiscal 2013 has fallen to $3.15 from $3.37 since the announcement. Special Offer: This special report zeroes in on some huge money-making opportunities as well as some urgent sell alerts that could save you from devastating losses in the year ahead. Get nearly 100 buy and sell calls from almost four dozen of the world’s most successful investing experts in Forbes’ Best Ideas for 2013. Not surprisingly, given the cuts on the estimates from the analysts, the Zacks Rank also fell to a Zacks Rank #5 (Strong Sell). Fiscal Third Quarter Results In Line On March 22, Darden released the actual third quarter results. Same store sales did decline 4.6%, which was the preliminary forecast in February. Some of the individual chains performed a bit better than expected, however. Red Lobster same store sales were down 6.6% but Darden had pre-announced them as declining 7%. Olive Garden, though, fell slightly more than expected at a decline of 4.1% compared to the 4.0% forecast. Darden made on the high end of its quarterly guidance range of $1.00 to $1.02, as it posted $1.02 in the quarter. Darden re-confirmed the full year guidance between $3.06 and $3.22. The company said it was seeing traffic improvement in the fiscal fourth quarter due to new menu categories at the Olive Garden like the lighter Italian fare menu. Consumers want to eat healthier and cheaper. Items under $15 are also selling better at the Red Lobster. Darden is also targeting the lunch crowd at both Olive Garden and Red Lobster, thinking that it was an untapped market. It is rolling out new menu options specifically for this market segment. Darden is a turnaround story but the earnings just aren’t there yet. Check out …read more
Source: FULL ARTICLE at Forbes Latest

Business, Finance, Occupation & Industry

Soft Sales at Red Lobster Sink Darden's Earnings

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By The Associated Press

darden earnings red lobster panera chipotle

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Victor J. Blue, Bloomberg via Getty Images

Darden Restaurants‘ third-quarter net income dropped 18 percent, as it dealt with soft sales at Red Lobster but the performance still beat Wall Street‘s expectations.

The Orlando, Fla., company said Friday that sales at its Olive Garden, Red Lobster and LongHorn Steakhouse restaurants open at least a year fell a combined 4.6 percent. The figure is a key gauge of a restaurant operator’s performance because it excludes results at store recently opened or closed.

Darden Restaurants Inc. (DRI) has been struggling to make its brands relevant again as diners increasingly head to chains like Chipotle Mexican Grill Inc. (CMG) and Panera Bread Co. (PNRA), where they feel they’re getting restaurant-quality food without paying as much. As it looks for ways to catch up to shifting trends, Red Lobster this week started testing a “pay-at-the-counter” concept at two location near the its headquarters.

For the three months ended Feb. 24, Darden earned $134.4 million, or $1.02 a share. That’s down from $164.1 million, or $1.25 a share, a year earlier. Analysts polled by FactSet expected earnings of $1.01 a share.

Revenue rose 5 percent to $2.26 billion from $2.16 billion, matching Wall Street‘s view. Revenue for the specialty restaurant group surged 61 percent, buoyed by the addition of some Yard House restaurants, as well as new restaurants for The Capital Grille, Bahama Breeze and Seasons 52.

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Revenue at Red Lobster dropped 6 percent as it contended with higher expenses and weaker sales at its locations in the U.S. open at least a year. Olive Garden revenue edged up slightly and revenue for LongHorn Steakhouse climbed 6.9 percent as both chains took in money from new restaurants.

Darden said that bad winter weather hurt sales at some of its restaurants. Sales at Red Lobster restaurants open in the U.S. at least a year declined 6.6 percent in the quarter. The figure fell 4.1 percent for Olive Garden locations in the U.S. and dropped 1.6 percent for LongHorn Steakhouse.

The company reaffirmed its fiscal 2013 earnings forecast of $3.06 to $3.22 a share. Analysts predict earnings of $3.17 a share. It still anticipates revenue will climb 6 percent to 7 percent. Based on the prior year’s revenue of $8 billion, this implies about $8.48 billion to $8.56 billion.

Wall Street expects revenue of $8.52 billion.

Darden’s board also declared a quarterly dividend of 50 cents a share. The dividend will be paid on May 1 to shareholders of record on April 10. Darden Restaurants shares closed at $48.96 on Thursday.

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Source: FULL ARTICLE at DailyFinance

Business, Finance, Occupation & Industry

5 Things to Watch on Wall Street This Week

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By Rick Aristotle Munarriz

Z10 Blackberry

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Sean Gallup, Getty ImagesVisitors try out the Blackberry Z10 smartphone at the Vodafone stand at the 2013 CeBIT technology trade fair on March 5, 2013 in Hanover, Germany.

From the world’s leading overnight shipper reporting to a smartphone pioneer hitting the market with a new phone, there will be plenty of news waiting to break in the coming days. Let’s go over some of the items that will help shape the week that lies ahead on Wall Street.

1. Showtime for BlackBerry: It’s been two months since BlackBerry (BBRY) unveiled its BlackBerry 10 mobile operating system and the two smartphones that will usher in the company’s best shot at a turnaround.

After a long wait, stateside fans will finally get a chance to buy the BlackBerry Z10. The new handset will be available through AT&T (T) on Friday. Verizon Wireless will begin stocking the phone six days later.

BlackBerry can’t afford to miss. Revenue is falling, and profitability is taking an even bigger hit. After peaking with a base of more than 80 million global subscribers, BlackBerry’s popularity is starting to wane. If BlackBerry’s Z10 and Q10 smartphones don’t sell briskly, it’s hard to fathom the market giving the smartphone pioneer another crack at a turnaround.

The good news is that BlackBerry revealed last week that a partner placed an order for a million phones, representing the largest purchase order in company history. The challenge now is for the partner to actually sell those devices.

2. When You’re Here You’re Family: Olive Garden and Red Lobster may be punch lines for restaurant jokes, but the casual dining chains have a funny way of continuing to pack in the hungry during peak lunch and dinner hours.

Darden Restaurants (DRI) is the parent company of both chains. Darden also watches over smaller concepts including LongHorn Steakhouse, Bahama Breeze, and Seasons 52.

There’s been a fear that high gas prices and the end of the two-year payroll tax cut will eat into casual dining, and Darden confirmed that business was starting to slow last month. Darden conceded that same-store sales were off by 4.5 percent during the holiday quarter at its three largest concepts (Olive Garden, Red Lobster, and LongHorn).

We’ll get a clearer snapshot when Darden reports on Friday, but analysts are already braced for a decline in profitability. Olive Garden may have unlimited breadsticks, but its bread — as in money — has been limited.

3. There Goes the Neighborhood: The housing industry has bounced back in a major way, and homebuilders KB Home (KBH) and Lennar (LEN) have been major beneficiaries.

Both developers will be reporting this week, and analysts see improving results at both companies.

It’s easy to see why the fundamentals are improving for the builders. As home prices …read more
Source: FULL ARTICLE at DailyFinance

Business, Finance, Occupation & Industry

5 Reasons to Worry About Next Week

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By Rick Munarriz, Munarriz, The Motley Fool

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The economy is showing signs of fumbling the recovery.

Sure, the Dow is rocking at all-time highs. The Dow has rattled off 10 consecutive trading days of gains, and you have to go all the way back to 1996 to find the last time that the Dow had that kind of winning streak. However, everything isn’t as rosy as the new highs suggest. Analysts have been trimming their profit targets on many leading companies, and let’s not get started on the record number of people on food stamps at a time when unemployment is supposedly at a multi-year low.

The news isn’t just iffy on the macro level. There are also more than a few companies that aren’t pulling their own weight in this supposed economic recovery.

There are still plenty of names posting lower earnings than they did a year ago. Let’s go over a few of the companies that are expected to go the wrong way on the bottom line next week.

Company

Latest Quarter EPS (Estimated)

Year-Ago Quarter EPS

Darden Restaurants

$1.01

$1.25

Insmed

($0.33)

($0.30)

Adobe Software

$0.31

$0.57

TIBCO Software

$0.18

$0.20

Tiffany

$1.36

$1.39

Source: Thomson Reuters.

Clearing the table
Let’s start at the top with Darden.

The Darden name may not ring a bell, but some of its chains will be all too familiar. Darden is the company behind Olive Garden, LongHorn Steakhouse, and Red Lobster. Some of its smaller faster growing chains are the Caribbean themed Bahama Breeze, and the health-conscious Seasons 52.

Given Darden‘s wide range of properties, it’s typically a good gauge for casual dining, in general.

Investors are already braced for a soft report. Darden warned last month that traffic to its restaurants was suffering as a result of a spike in gas prices and the payroll tax hike that kicked in this year. Darden forecasted a decline of 4.5% in comps at its three flagship chains just a couple of days before the period came to an end.

Insmed will kick off the week with its quarterly financials on Monday morning.

Insmed is a biotech that’s keying in on inhaled therapies for orphan lung diseases. Biotechs in the early stage are rarely profitable. It takes years to get drugs through the regulatory pipeline, and most treatments fall short before they make it to the finish line.

Insmed’s has treatments in late stage clinical trials, with important findings expected later this year. The losses will naturally continue along the way, though investors would prefer to see Insmed’s losses narrow instead of expand.

Adobe is the desktop publishing giant that always seems to nag you about that Flash update that you’ve been meaning to get around to. From Photoshop to Acrobat, Adobe helps tech-savvy content creators and developers author presentations.

This would seem like a steady niche, but free and nearly-free websites and apps have eaten into the low-end of Adobe’s business. Analysts …read more
Source: FULL ARTICLE at DailyFinance