The Wall Street Journal-20080213-Darden Expects To Miss Targets- Touts Purchase

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Darden Expects To Miss Targets; Touts Purchase

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Darden Restaurants Inc. said that because of the current "difficult consumer environment" it won't hit long-term sales and earnings targets this year.

But the company's chief executive, Clarence Otis, told an investors' conference in New York that cost synergies from the company's recent acquisition of the LongHorn Steakhouse and Capital Grille chains are being realized at anticipated or better-than-expected levels, and that the company's new business model will achieve financial goals with less dependence on same-store sales.

"Our view is that the acquisition is particularly timely," Mr. Otis said, addressing what he said were investor concerns about the deal given sluggish sales in much of the casual-dining sector.

The comments came one day after the multichain operator said it expected to slightly beat analysts' predictions for current fiscal third-quarter earnings. Those results will be released March 18.

Darden's flagship eateries are its Olive Garden Italian restaurants and Red Lobster seafood houses. Mr. Otis said the recent acquisitions of restaurants that focus on beef should help offset pressures "that current challenges are putting on our business model."

The company reaffirmed achieving average annual sales growth of 7%- 9% in coming years. The CEO expects the company to post long-term earnings per share growth of 10% to 15%.

At 4 p.m. in New York Stock Exchange composite trading, Darden shares rose 4.6% to $30.35.