Darden Restaurants Inc. fell the most in more than nine months after first-quarter profit trailed analysts’ estimates amid declining sales at its Olive Garden and Red Lobster chains.
The shares slid 4.9 percent to $46.90 at 10:02 a.m. in New York, after earlier dropping as much as 5.5 percent for the biggest decline since Dec. 4. Darden had gained 9.4 percent this year through yesterday, compared with a 21 percent gain in the Standard & Poor’s 500 Index.
Profit excluding some items in the quarter ended Aug. 25 was about 53 cents a share, the Orlando, Florida-based company said today in a statement today. That trailed the 70-cent average of 29 analysts’ estimates compiled by Bloomberg. Sales rose 6.1 percent to $2.16 billion, trailing analysts’ $2.2 billion projection.
Olive Garden and Red Lobster have been struggling to lure diners as cash-strapped Americans eat out less. Deals such as $6.95 lunches and three-course dinners at Olive Garden haven’t helped much amid competing offers from Brinker International Inc.’s Chili’s and DineEquity Inc.’s Applebee’s. First-quarter same-restaurant sales fell 4 percent at Olive Garden and slipped 5.2 percent at Red Lobster.
“We are working to improve affordability and to refine the guest experiences we provide so that they remain responsive to what guests want beyond affordability,” Chief Executive Officer Clarence Otis said in the statement.
Darden said it will eliminate 80 to 85 jobs in operating support and cut spending on some programs to reduce annual operating expenses by $50 million. The company said the actions will reduce spending by about $25 million in the current fiscal year, offset by a one-time cost of $10 million to implement the cuts.