Darden Restaurants Inc., the operator of Olive Garden and Red Lobster, expects lower commodity costs in the second half of this fiscal year, Chief Financial Officer Brad Richmond said.
“We do see the markets, from this very elevated level, moderately moving down in the back half of our fiscal year,” Richmond said today in a telephone interview. Seafood remains “at pretty high prices right now for us,” he said.
Darden, along with other restaurants, has faced surging raw-ingredient costs during the past year that have forced it to raise menu prices. The U.S. Department of Agriculture predicts food prices will rise as much as 4 percent in 2011.
The restaurant company reported a 19 percent gain in fourth-quarter profit as sales increased at its Red Lobster and LongHorn Steakhouse restaurants. Net income in the period ended May 29 rose to $137.4 million, or 99 cents a share, the Orlando, Florida-based company said today in a statement. The average analyst estimate compiled by Bloomberg was $1. Profit from continuing operations was $1 a share.
Darden fell 81 cents to $48.95 at 5:40 p.m. New York time in trading after the close of the New York Stock Exchange. The shares rose 46 cents to $49.76 in NYSE composite trading today, for a gain of 28 percent in the past year.
“Acquisitions are part of our strategy,” Richmond said. While the company’s current brands are capable of delivering sales goals for the next five years, “when you get beyond that, we might be pushing them too hard,” he said.
“The potential for an acquisition, at some point in time, to come in and to help in sustaining that growth is something that we’re always open to.”
Darden has almost 1,900 restaurants in the U.S. and Canada. Fourth-quarter net income last year was $115.6 million, or 80 cents a share.