ORLANDO, Fla. (AP) — Darden’s fiscal fourth-quarter profit dropped 35 percent, dragged down by charges and costs tied to its strategic plan to reshape the restaurant company.
Its shares dropped more than 5 percent in Friday premarket trading.
The owner of Red Lobster, Olive Garden and other restaurants earned $86.5 million, or 65 cents per share, for the three months ended May 25. A year earlier the Orlando, Florida-based company earned $133.2 million, or $1.01 per share.
Stripping out 9 cents per share for legal, financial advisory and other costs tied to its strategic plan and asset impairment charges, earnings were 84 cents per share. This was 10 cents below the forecast of analysts surveyed by FactSet.
Darden is looking to sell Red Lobster to investment firm Golden Gate Capital in a proposed $2.1 billion deal. Starboard Value LP and Barington Capital Group LP have challenged Darden’s planned sale, which is targeted to close in fiscal 2015’s first quarter.
During the quarter, sales at Red Lobster locations in the U.S. open at least a year declined 5.6 percent. At Olive Garden, the metric fell 3.5 percent.
Bright spots included LongHorn Steakhouse and the specialty restaurant group, which includes Bahama Breeze, The Capital Grille, Yard House, Eddie Vs and Seasons 52. Sales at LongHorn Steakhouse restaurants in the U.S. open at least a year increased 2.4 percent. The figure climbed 2 percent at the specialty restaurant group.
Sales at restaurants open at least a year is a key indicator of a restaurant operator’s performance because it excludes results from locations recently opened or closed.
Darden Restaurants Inc.’s revenue rose slightly to $2.32 billion, which was just short of the $2.33 billion Wall Street predicted.
Sales at U.S. LongHorn Steakhouse restaurants open at least a year climbed 2.4 percent.
For the full year, Darden posted an adjusted profit of $2.47 per share. Annual revenue totaled $8.76 billion.
The company’s board also declared a quarterly dividend of 55 cents per share. The dividend will be paid on August 1 to shareholders of record on July 10.
Shares of Darden dropped $2.52, or 5.1 percent, to $47 about 45 minutes before the market open.