Red Lobster 2012 Annual Report Download - page 6

` Net earnings from continuing operations were $476.5 million
in fiscal 2012, a 0.5 percent decrease from net earnings
from continuing operations of $478.7 million in fiscal 2011.
Diluted net earnings per share from continuing operations
were $3.58 in fiscal 2012, a 5.0 percent increase from
diluted net earnings per share of $3.41 in fiscal 2011.
` In fiscal 2012, on an after-tax basis, net losses from
discontinued operations were $1.0 million and diluted net
losses per share from discontinued operations were $0.01,
related primarily to the carrying costs and losses on the
remaining properties held for disposition associated with
Smokey Bones Barbeque & Grill and Bahama Breeze
closings from fiscal 2007 and fiscal 2008. Including losses
from discontinued operations, combined net earnings
were $475.5 million in fiscal 2012, 0.2 percent below the
combined net earnings of $476.3 million in fiscal 2011.
Including losses from discontinued operations, combined
diluted net earnings per share were $3.57 in fiscal 2012,
compared to $3.39 in fiscal 2011.
` Olive Garden’s total sales were $3.58 billion, up 2.5 percent
from fiscal 2011. This reflected average annual sales per
restaurant of $4.7 million, the addition of 38 net new
restaurants and a U.S. same-restaurant sales decrease
of 1.2 percent.
` Red Lobster’s total sales were $2.67 billion, a 5.9 percent
increase from fiscal 2011. This reflected average annual
sales per restaurant of $3.8 million, the addition of six
net new restaurants and a U.S. same-restaurant sales
increase of 4.6 percent.
` LongHorn Steakhouse’s total sales were $1.12 billion,
up 13.5 percent from fiscal 2011. This reflected average
annual sales per restaurant of $3.0 million in fiscal 2012,
the addition of 32 net new restaurants and a U.S. same-
restaurant sales increase of 5.3 percent.
` The Specialty Restaurant Group’s total sales were
$623 million, a 24.1 percent increase from fiscal 2011,
and reflected strong growth from its three legacy brands
as well as the addition of Eddie V’s. Total sales increased
10.3 percent at The Capital Grille to $305 million, based on
a same-restaurant sales increase of 5.3 percent and the
addition of two net new restaurants. Total sales increased
12.5 percent for Bahama Breeze to $154 million, based
on a same-restaurant sales increase of 3.4 percent and
the addition of four new restaurants. And total sales
increased 45.3 percent at Seasons 52 to $128 million,
based on a same-restaurant sales increase of 3.8 percent
and the addition of six new restaurants. Finally, the
acquisition and operation of the 11 Eddie V’s restaurants
added $35 million of sales in fiscal 2012.
` We continued the buyback of Darden common stock,
spending $375 million in fiscal 2012 to repurchase
8.2 million shares. Since our share repurchase program
began in 1995, we have repurchased over 170 million
shares of our common stock for $3.77 billion, which
amounts to approximately 55 percent of our market
capitalization as of the end of fiscal 2012.
CREATING COMPELLING VALUE
As we look forward, we believe that over the next five years
we have the opportunity to increase our annual revenues by
$3 billion to $4.5 billion and increase our annual diluted
net earnings per share from continuing operations by $2.15
to $3.65, while returning $2.9 billion to $3.6 billion to share-
holders through dividends and repurchase of our common
stock. And, we have this level of opportunity even before
including the effect of our pending acquisition of Yard House,
which is expected to close early in our fiscal second quarter.
One of the most exciting brands in the full-service restaurant
industry, Yard House currently operates 39 restaurants in
13 states, its average sales per restaurant are $8.4 million,
it achieved compound annual sales growth of 21 percent
from 2009 through 2011, and today it is on track to open at
least five new restaurants each year for the next several years.
Based on its success and expansion since the first restaurant
opened in 1996, we believe Yard House has the potential to
reach at least 150 to 200 restaurants nationally.
Given Darden’s current scale, scope and capital cost, we
think it is appropriate to define the level of sales, earnings
and cash flow growth we envision – which will be elevated by
the addition of Yard House – as compelling value creation.
We are confident we can achieve these growth goals for two
reasons. First, we have a track record of creating comparable
value. Since fiscal 2008, for example, our annual revenues
increased by $1.4 billion, our annual diluted net earnings
per share from continuing operations increased by $1.03
and our cumulative dividends and share repurchase totaled
$1.9 billion. Second, we believe our Company has what it
takes to deliver on the opportunity before us. Our brands
have strong individual and collective growth profiles. We
have a wealth of collective experience and expertise. Our
operating support platform is robust and ever more cost-
effective. In addition, we have a vibrant culture that is marked
by both an insatiable appetite to win in the marketplace
and a burning desire to make a positive difference in the
lives of our guests, employees, partners and neighbors.
STRONG BRANDS
We have a demonstrated ability to build compelling brands
and evolve them over time so that they remain highly relevant
to restaurant consumers. These capabilities show in the
competitively superior same-restaurant sales growth we
achieved in fiscal 2012 at Red Lobster and LongHorn
Steakhouse, which are in their fifth and fourth decades of
operation, respectively. Their performance reflects consid-
erable work over the past several years in refreshing critical
brand elements, including each brand’s promotional
approach, core menu, advertising, and restaurant design
2 Darden Restaurants, Inc. 2012 Annual Report