Olive Garden Owner Sees Shares Jump After Boosting Forecastby
Darden Restaurants Inc., the parent company of Olive Garden and LongHorn Steakhouse, rose the most in more than two years after increasing its annual forecast, validating a turnaround plan begun after a board shake-up last year.
The company is now projecting earnings of as much as $3.35 a share this year, up from a previous estimate of $3.30. Same-store sales could rise as much at 3 percent, compared with an earlier prediction of 2.5 percent. Second-quarter earnings also topped analysts’ estimates.
The bright outlook follows a proxy battle with investment firm Starboard Value last year that led to the entire board being replaced. As part of efforts to reinvigorate the restaurant chain, the company announced plans this year to split off about 430 properties and transfer them into a real estate investment trust. Darden has also worked to reignite sales at Olive Garden with a new “back-to-basics” menu that included a new line of breadstick sandwiches.
Darden shares jumped 7 percent to close at $62.50 in New York, the biggest single-day gain since October 2013. The stock has now climbed 19 percent this year.
The company posted second-quarter profit of 54 cents, excluding some items. That beat the 42-cent average estimate.