Sales at Darden grew to $8.76 billion in fiscal 2014, which ended May 25, 2014, up 2.4 percent from 2013. While LongHorn Steakhouse, Yard House, and the Specialty Restaurants group posted sales gains, cornerstone brand Olive Garden saw a 3.4 percent sales decline from 2013, while recently-cut Red Lobster saw a 6 percent sales slide. Darden's Specialty Restaurant Group, which includes The Capital Grille and Yard House, posted strong gains.

Fiscal 2014

For fiscal year 2014, total sales from continuing and discontinued operations were $8.76 billion, a 2.4 percent increase from $8.55 billion last year. As a result of the pending sale of Red Lobster, operating results for Red Lobster are included in discontinued operations for all periods presented. 

Total sales for fiscal 2014 include sales of $6.29 billion from continuing operations and sales of $2.47 billion from discontinued operations, which includes Red Lobster. Total sales for fiscal 2013 include sales of $5.92 billion from continuing operations and sales of $2.63 billion from discontinued operations. 

The increase reflects 5.6 percent of growth in sales for the year due to new restaurants (including incremental operating weeks this year compared to last year, as a result of the acquisition of 40 Yard House restaurants in Q2 2013), same-restaurant sales growth of 2.7 percent for LongHorn Steakhouse, and 1.6 percent for Darden's Specialty Restaurants, offset partially by same-restaurant sales declines of 3.4 percent for Olive Garden and 6 percent for Red Lobster.

Olive Garden

For the full fiscal year, total sales were $3.64 billion, a 1.1 percent decline from last year; average annual sales per restaurant were $4.4 million; and U.S. same-restaurant sales declined 3.4 percent. 

The fourth quarter sales of $926 million were 2.7 percent lower than the prior year due to its U.S. same-restaurant sales decline of 3.5 percent, partially offset by revenue from nine net new restaurants. For the quarter, on a percentage of sales basis, food and beverage expenses and restaurant labor expenses were higher. This resulted in a decline for the quarter in both operating profit and operating profit as a percentage of sales. 

Red Lobster

For the full fiscal year, total sales were $2.46 billion, a 6.2 percent decrease compared to last year, average annual sales per restaurant were $3.5 million and U.S. same-restaurant sales decreased 6 percent. Red Lobster's fourth quarter sales of $664 million were 5.6 percent lower than the prior year, which reflected its U.S. same-restaurant sales decline of 5.6 percent.  

For the quarter, on a percentage of sales basis, food and beverage expenses, restaurant expenses, and depreciation and amortization expenses were higher compared to the fourth quarter of last year, while selling, general, and administrative expenses were lower. The net result is that operating profit and operating profit as a percentage of sales were below last year.  

Darden expects to receive net cash proceeds from the sale of Red Lobster, after tax and transaction costs, of approximately $1.6 billion, of which approximately $1 billion will be used to retire outstanding debt. The remaining net proceeds of approximately $500 million to $600 million will be deployed in fiscal 2015 for a new share repurchase program of up to $700 million. The transaction is expected to close in Darden's first quarter of fiscal 2015.

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Longhorn Steakhouse

For the full fiscal year, total sales were $1.38 billion, a 12.4 percent increase from last year, average annual sales per restaurant were $3.1 million and U.S. same-restaurant sales increased 2.7 percent.

The fourth quarter sales of $376 million were 10.8 percent higher than the prior year, driven by revenue from 34 net new restaurants and its U.S. same-restaurant sales increase of 2.4 percent. For the quarter, on a percentage of sales basis, higher food and beverage expenses, restaurant expenses and selling, and general and administrative expenses were slightly offset by lower restaurant labor expenses. This resulted in a decline in both in operating profit and operating profit as a percentage of sales.  

Specialty Restaurant Group

For the full fiscal year, total sales for the Specialty Restaurants were $1.23 billion, a 25 percent increase from last year. 

At The Capital Grille, average annual sales per restaurant were $7.1 million and same-restaurant sales increased 3.4 percent for the fiscal year. At Bahama Breeze, average annual sales per restaurant were $5.6 million and same-restaurant sales increased 4.1 percent for the fiscal year. At Seasons 52, average annual sales per restaurant were $5.7 million and same-restaurant sales declined 2.2 percent for the fiscal year. At Eddie V's, average annual sales per restaurant were $6 million and same-restaurant sales increased 1.1 percent for the fiscal year. And, at Yard House, average annual sales per restaurant were $8.2 million and same-restaurant sales increased 0.3 percent for the fiscal year. 

Fourth quarter sales of $342 million were 15.9 percent higher than the prior year, driven by same-restaurant sales increases of 4.1 percent at Bahama Breeze, 4 percent at The Capital Grille, 0.8 percent at Yard House, 0.3 percent at Eddie Vs partially offset by a same-restaurant sale decline of 1.6 percent at Seasons 52.  Sales growth for the group also reflected revenue from five new restaurants at The Capital Grille, four at Bahama Breeze, seven at Seasons 52, three at Eddie V's, and eight at Yard House.  

Fourth Quarter Earnings 

Fourth quarter total sales from continuing and discontinued operations were $2.32 billion, which compares to $2.3 billion in the fourth quarter last year. (As a result of the pending sale of Red Lobster, operating results for Red Lobster are included in discontinued operations for all periods presented.) In the fourth quarter, U.S. same-restaurant sales increased 2.4 percent at LongHorn Steakhouse and 2 percent at the Specialty Restaurant Group and declined 3.5 percent at Olive Garden and 5.6 percent at Red Lobster.  

Total sales for the fourth quarter of this year include sales of $1.65 billion from continuing operations and sales of $666.2 million from discontinued operations. Total sales in the fourth quarter of last year include sales of $1.59 billion from continuing operations and sales of $706.5 million from discontinued operations. The increase in total sales for the fourth quarter of this year reflects the operation of 69 net new restaurants compared to the fourth quarter last year and same restaurant-sales increases for LongHorn Steakhouse and Darden's Specialty Restaurants, offset by same-restaurant sales declines for Olive Garden and Red Lobster.

In the fourth quarter, U.S. same-restaurant sales increased 2.4 percent at LongHorn Steakhouse and 2 percent at the Specialty Restaurant Group and declined 3.5 percent at Olive Garden and 5.6 percent at Red Lobster.