Darden Restaurants (DRI), the owner of the popular Italian food chain, reported earnings and sales on Tuesday that beat Wall Street’s forecasts. The company also raised its profit outlook for the year.
Overall sales were up nearly 6% to $1.69 billion — that’s a lot of breadsticks and fried lasagna bites.
Darden has now reported six consecutive quarters of sales growth. It’s been an impressive turnaround for the company since activist hedge fund and Darden shareholder Starboard Value Partners went on a campaign against it.
Starboard first took a stake in Darden in December 2013. The fund quickly started to pressure Darden to make changes, particularly at Olive Garden.
Last September, Starboard released a 294-slide presentation that criticized Olive Garden for not salting its pasta water, putting excessive amounts of sauce on its food, and having non-Italian items on the menu. It also said Olive Garden was wasting too much food.
Starboard then pushed to seize control of Darden’s board … and won.
Following Darden’s shareholder meeting in October, CEO Clarence Otis soon left. COO Gene Lee was promoted to the top spot, and Starboard CEO Jeff Smith became the company’s chairman.
Since then, Darden has taken several steps to boost sales and profits at Olive Garden, which accounts for nearly 60% of Darden’s total sales. Darden also owns LongHorn Steakhouse and The Capital Grille. It sold Red Lobster to a private equity firm last year.
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SOURCE: CNN Money – Paul R. La Monica