Darden Restaurants Inc. released its annual financial report for the fiscal year ending on May 29th, 2012. Darden reported a net profit of $475.5 million after calculating expenses and tax for the year (Darden Restaurants Inc. [DRI], 2012). The same reports from 2011 and 2010 showed net earnings to be $476.3 million and $404.5 respectively (DRI, 2012). This shows that Darden Restaurants had major growth in their fiscal year ending in 2011, but was unable to sustain that profit growth through the fiscal year ending in 2012. According to the annual report (2012), Darden earned $7,998.7 million in total sales in 2012. In 2011, Darden Restaurants had a total revenue of $7,500.2 million. This growth in total revenue was accompanied by a slightly larger growth in total costs, causing the net earnings in 2012 to be smaller than in 2011. Even though the company did not increase their profits between 2011 and 2012, they were able to increase their earnings per share. In 2011 the reported basic earnings per share was $3.48, and in 2012 the same value was $3.65 (DRI, 2012). This shows that although they were only able to create a similar amount of profit as the year before, Darden Restaurants was able to increase the value for each individual investor.
The
recession of 2008-2009 did not seem to have an affect Darden Restaurants. The company had steady profit growth from
2004 to 2006, as shown in figure 1 (DRI, 2006).
The company did have a major dip during the fiscal year ending in 2007. As shown in both figure 1 and figure 2,
Darden went on to continue increasing either their net earnings or their
earnings per share until 2012. Many
other restaurants stayed steady or took a hit during the recession (DRI, 2009)
(DRI, 2012). It seems that since Darden
was able to maintain profit growth through the recession, they have an
advantage over other companies in the industry.
Figure 1. DRI annual profit. This figure show
the annual profit of Darden Restaurants Inc. in dollars. Created using multiple
sources.
Figure 2. DRI annual basic earnings per
share. This figure shows the basic earnings per share of Darden Restaurants Inc. in dollars. Created using data
from multiple sources.
Cited Sources:
Darden
Restaurants Inc. (2006). 2006 annual report. Retrieved from: http://investor.darden.com/files/doc_downloads/Annual_Report_2006.pdf
Darden
Restaurants Inc. (2009). 2009 annual report. Retrieved from: http://investor.darden.com/files/doc_downloads/2009_Annual_Report.pdf
Darden
Restaurants Inc. (2012). 2012 annual report. Retrieved from: http://investor.darden.com/files/doc_financials/Darden_2012AR%5B1%5D.pdf
I agree with your statement that since Darden was able to increase profits during their recession, they could have an advantage. Though what do you think gives them this advantage since Darden's restaurants are not the quick service and cheap types compared to McDonalds and Panera. These are the companies that usually do well in a recession so I am interested to find out what Darden was able to do during the 2007-2009 recession to stay profitable.
ReplyDeleteI did not expect that Darden Restaurants would have remained so steady through the recessions just because I would have thought less people would choose dine in. It makes me wonder if they had any particular strategies that helped them maintain their profits.
ReplyDelete