Darden Restaurants Inc.'s (BBB+/Stable/A-2) weaker than expected fiscal 2003 third quarter earnings have no effect on the company's credit rating or outlook. Darden's EBITDA margin fell to 14.1% in the third quarter from 14.8% in the same quarter the previous year. Results were impacted by below-plan sales at its Red Lobster units due to the economy and severe weather. Unanticipated workers' compensation and public liability expenses also contributed to the profit shortfall. Although results were below Standard & Poor's expectations, the company's strong position in the casual dining sector of the restaurant industry and its stable cash flow mitigate the effect of the weak economy on Darden.
