Darden warns of earnings hit from Hurricane Irene

Darden Restaurants Inc (DRI.N), parent of Red Lobster and Olive Garden, warned that Hurricane Irene dented earnings in its fiscal first quarter, and its shares fell almost 5 percent in after-hours trading.

Orlando, Florida-based Darden said on Tuesday it expects to report earnings from continuing operations of about 78 cents per share for the quarter ended August 28.

The company said Irene hurt sales at established Red Lobster, Olive Garden and LongHorn Steakhouse restaurants and estimated that the storm reduced quarterly earnings by about 2 cents per share.

Darden also said it sees full-year earnings per share growth from continuing operations toward the lower end of its previously announced range of 12 to 15 percent.

During the first quarter, combined sales at established U.S. Red Lobster, Olive Garden and LongHorn Steakhouse restaurants are expected to have been up 2.8 percent, the company said.

Same-restaurant sales at Olive Garden, which has struggled of late, were down in June, July and August. That gauge of restaurant health showed gains at both Red Lobster and LongHorn Steakhouse during each of the three months in the first quarter.

The results at Olive Garden were below our expectations, Clarence Otis, Darden's chairman and chief executive, said in a statement.

Darden, seen as one of the best-performing U.S. restaurant companies, also said it plans to buy more of its own shares.

It now expects to repurchase between $450 million and $500 million of its common stock during the year, up from its previous target of $350 million to $400 million.

Darden is scheduled to release first-quarter results on September 28.

Shares were down 4.7 percent at $44.00 in after-hours trading, compared with a close of $46.18 on the New York Stock Exchange.