Darden Restaurants Inc (NYSE: DRI) is finding its shares under severe pressure this morning after the company lowered its 2012 earnings and sales guidance. The company blamed deep discounts at its Olive Garden chain which actually failed to lure in new customers for the cheap Italian food in massive quantities.
The new earnings growth target, which is at least still growth, was 4% to 7%; the prior forecast was that its 2012 earnings growth would hit in the range of 12% to 15%. As far as sales growth, this is being put at 6% to 7% rather than the prior range of 6.5% to 7.5% given earlier.
Darden is set to report earnings in the middle of the month and the earnings are now expected to be about $0.41 EPS versus a consensus of $0.54 EPS from Thomson Reuters.
Here is the big culprit since the real numbers do not sound too bad until you get to the earnings per share. The company’s same-store sales at the Olive Garden operations came in at -5.7% in November. Olive Garden accounts for close to half of the entire company’s sales.
Darden shares closed at $47.73 on Monday and the stock is down more than 8% at $43.85 in the pre-market and the 52-week trading range is $40.69 to $53.81.
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