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Darden (DRI) Cuts FY View, Says Severe Winter To Hit 3Q Sales

 February 22, 2013 09:49 AM

(By Balachander) Darden Restaurants Inc. (NYSE: DRI) cut its guidance for the full year, citing higher payroll taxes and rising gasoline prices.

Orlando, Florida-based Darden now expects same-restaurant sales at its three casual dining brands to fall between 1.5 percent and 2.5 percent, compared with a decline of 1.0 percent to flat sales projected earlier for 2013.

The company also currently expects earnings per share (EPS) from continuing operations between $3.06 to $3.22 on total sales growth of between 6 percent and 7 percent. Darden's earlier guidance called in for EPS from continuing operations of $3.29 to $3.49 and total sales growth of 7.5 percent to 8.5 percent.

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Wall Street analysts, on average, expected EPS of $3.37 on sales growth of 7.40 percent.

"Two of the most prominent were increased payroll taxes and rising gasoline prices, which together put meaningful pressure on the discretionary purchasing power of our guests," commented CEO Clarence Otis.

For the third quarter, Darden forecasts EPS from continuing operations to be around $1.00 to $1.02, trailing consensus estimate of $1.13. The company anticipates that blended U.S. same-restaurant sales at its Olive Garden, Red Lobster and LongHorn Steakhouse brands will decline 4.5 percent, citing more severe winter weather this year.

It also expects U.S. same-restaurant sales to fall roughly 1.5 percent at LongHorn Steakhouse, 4.0 percent at Olive Garden and 7.0 percent at Red Lobster brands.    

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The stock, which has been trading in the 52-week range between $44.11 and $57.93, added 1.21 percent to trade at $45.22 in Friday early trade.

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