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UPDATE 1-Darden expects Hurricane Irma business hit to double Harvey's
September 26, 2017 / 3:01 PM / 3 months ago

UPDATE 1-Darden expects Hurricane Irma business hit to double Harvey's

(Adds sales data, analyst and investor comment)

LOS ANGELES, Sept 26 (Reuters) - Olive Garden parent Darden Restaurants Inc on Tuesday said it expected the hit to its sales and earnings per share from Hurricane Irma to be about double that of Hurricane Harvey.

Harvey slammed into the U.S. Gulf Coast in the final days of Darden’s fiscal first quarter which ended on Aug. 27.

It reduced same-store sales by about 30 basis points and EPS by 1.5 cents from what was expected before the storm, Darden Chief Financial Officer Rick Cardenas said on a conference call with analysts.

Orlando-based Darden, which also owns the Yard House, Capital Grille, LongHorn Steakhouse, Cheddar’s chains, was the first major chain to report on the financial damage from Harvey, which lashed communities in Texas and Louisiana and Irma, which earlier this month battered Puerto Rico and the southeastern United States.

Darden reiterated its full-year forecast, saying that cost cuts and other efforts would offset the impact from the storms.

Shares in the full-service restaurant operator fell 4 percent on disappointing results from Olive Garden, which accounts for just over half of total sales.

First-quarter sales at established Olive Garden restaurants were up 1.9 percent compared with a year earlier after higher prices helped offset a 0.3 percent traffic decline. Analysts, on average, expected an increase of 2.7 percent, according to research firm Consensus Metrix.

Overall same-restaurant sales were up 1.7 percent, excluding results from recently acquired Cheddar’s Scratch Kitchen, missing analysts’ average estimate for 2.2 percent gain.

Adjusted quarterly earnings were up 12.5 percent to 99 cents per share, excluding a 4 cent charge related to integrating Cheddar‘s.

Total sales increased 12.9 percent to $1.94 billion.

Earnings and revenues were roughly in line with Wall Street expectations.

The company’s reiterated full-year forecast was for an EPS of between $4.38 to $4.50, including the impact of Harvey and Irma. (Reporting by Lisa Baertlein in Los Angeles; Editing by Chizu Nomiyama and W Simon)

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