Darden profit rises on Olive Graden expansion

By William Spain, MarketWatch

CHICAGO (MarketWatch) - New restaurant openings and lower expenses at its Olive Garden chain helped Darden Restaurants push its fiscal second-quarter profit up 12%, and the casual dining company reiterated its full year earnings target Tuesday.

After the closing bell, Darden (DRI: news) said that earned $61.7 million, or 41 cents a share, on the period - up from $55.1 million, or 35 cents a share, a year earlier. The operator of Red Lobster, Olive Garden, Bahama Breeze, Smokey Bones and Seasons 52 restaurants said sales in the quarter ended Nov. 26 rose to $1.39 billion from $1.33 billion.

The average estimate of analysts polled by Thomson First Call had been for Darden to earn 40 cents a share on sales of $1.4 billion.

Sales at its Red Lobster locations open for at least a year were flat in November compared with a 3% rise in 2005, but edged up 0.7% on the whole quarter. Same-restaurant Olive Garden sales rose between 1% and 2% compared with a 6% rise last year and were up 2.9% in the second quarter.

Olive Garden's total sales for the period were $662.1 million, a gain of 7.1%, helped primarily by the opening of 27 net new restaurants.

Darden said it still expects full-year fiscal 2007 earnings growth of 10% to 12%, with sales up 5% to 6%. Combined same-restaurant sales for Red Lobster and Olive Garden are still pegged to rise 2% to 4%

Shares of Darden ended the regular session up almost 1% at $40.59 but slipped fractionally in after-hours trading.

William Spain is a MarketWatch staff writer in Chicago.