Darden Bags a Profit, Raises its Outlook – Wall Street Journal

Dec. 18, 2015 8:10 a.m. ET

Darden Restaurants Inc. swung to a profit in its latest quarter and boosted its earnings outlook for the year as same-restaurant sales increased across its brands.

The company now anticipates fiscal 2016 same-restaurant sales to grow 2.5% to 3% and adjusted earnings of $ 3.25 to $ 3.35 a share. The company had previously forecast earnings per share of $ 3.15 to $ 3.30.

Darden also outlined a new buyback program for up to $ 500 million of stock, which the company said amounts to about 6.7% of its total shares outstanding. It said the program doesn't have an expiration date.

Olive Garden continued to show strength in its turnaround, as same-store sales at the chain of casual Italian restaurants rose 1% during the quarter, marking the chain's fifth consecutive period of same-store-sales growth.

As a whole, same-store sales at Darden grew 1.6%, including a 2.6% rise at LongHorn Steakhouse and 1.5% growth at Capital Grille. Darden transitioned from a 53-week to a 52-week fiscal year, offsetting quarter comparisons by one week. Adjusted for the calendar, same-store sales at Darden grew 2.9%.

In the quarter ended Nov. 29, Darden reported a profit of $ 43.2 million, or 33 cents a share, compared with a loss of $ 32.8 million, or 26 cents, a year earlier. The company said the quarter was hurt 31 cents a share by costs related to its real estate spinoff. Adjusted earnings were 54 cents a share.

Revenue increased 3.2% to $ 1.61 billion.

Analysts polled by Thomson Reuters had forecast earnings of 42 cents on $ 1.62 billion in revenue.

Darden also said it completed the spinoff of its Four Corners Property Trust, FCPT 1.73 % which includes 424 restaurant properties. The company finished 62 of 64 planned restaurant sale leasebacks. In June, Darden revealed plans to separate some of its real-estate assets, spinning off some restaurants into a publicly traded real-estate investment trust, or REIT, while leasing back other properties, following prodding by activist investor Starboard Value LP.

Shares, which have risen 11% this year, edged up about 2% in light premarket trading.

Write to Anne Steele at Anne.Steele@wsj.com