Will These 2 Stocks Drag Down Retailers and Restaurants After Earnings?

Family Dollar Stores Inc. (NYSE:FDO) reported its results for the fourth quarter. Net income for the discount store rose to $79.8 million (66 cents per share) vs. $74 million (56 cents per share) in the same quarter a year earlier. This marks a rise of 8% from the year earlier quarter. Revenue rose 9.1% to $2.13 billion from the year earlier quarter. FDO beat the mean analyst estimate of 63 cents per share. Analysts were expecting revenue of $2.12 billion.

“A year ago we launched an ambitious, multi-year plan to accelerate revenue growth, expand operating margins and optimize our capital structure, and I am pleased to announce that we have executed well against our plans in a very difficult operating environment,” said Howard Levine, Chairman and CEO.

Competitors to Watch: Dollar General Corp. (NYSE:DG), 99 Cents Only Stores (NYSE:NDN), Dollar Tree, Inc. (NASDAQ:DLTR), Big Lots, Inc. (NYSE:BIG), Wal-Mart Stores, Inc. (NYSE:WMT), Target Corporation (NYSE:TGT), Fred’s, Inc. (NASDAQ:FRED), Costco Wholesale Corp. (NASDAQ:COST), Gordmans Stores, Inc. (NASDAQ:GMAN), and Amazing Savings, Inc (ODDJ).

Darden Restaurants, Inc. (NYSE:DRI) reported its results for the first quarter. Net income for the restaurant fell to $106.6 million (78 cents per share) vs. $113.1 million (80 cents per share) a year earlier. This is a decline of 5.7% from the year earlier quarter. Revenue rose 7.5% to $1.94 billion from the year earlier quarter. DRI fell in line with the mean analyst estimate of 78 cents per share. Analysts were expecting revenue of $1.93 billion.

“As we previously announced, strong sales growth this quarter at Red Lobster, LongHorn Steakhouse and our Specialty Restaurant Group was offset by below expectation sales results at Olive Garden, unfavorable year-over-year commodity costs and the adverse impact of Hurricane Irene,” said Clarence Otis, Chairman and Chief Executive Officer of Darden. “Olive Garden remains one of the strongest brands in the full-service restaurant industry and we are working to improve its sales performance during the balance of the year. With improvement at Olive Garden, continued sales momentum at the other brands, more neutral commodity cost comparisons in the second half of the year and a meaningful increase in the number of shares we will repurchase, we anticipate diluted net earnings per share growth of 12% to 15% this fiscal year – though we have higher confidence at this point in the year in the low end of the range.”

Competitors to Watch: Grill Concepts, Inc. (GLLC), Landry’s Restaurants, Inc (LNY), Ruth’s Hospitality Group, Inc. (NASDAQ:RUTH), Bravo Brio Restaurant Group, Inc. (NASDAQ:BBRG), Granite City Food & Brewery Ltd. (NASDAQ:GCFB), O’Charley’s Inc. (NASDAQ:CHUX), Ark Restaurants Corp. (NASDAQ:ARKR), Morton’s Restaurant Group, Inc. (NYSE:MRT), Red Robin Gourmet Burgers, Inc. (NASDAQ:RRGB), and McCormick & Schmick’s Seafood Restaurant (NASDAQ:MSSR).

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