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Darden Restaurants to enjoy tax change windfall

The company also announced plans to invest around US$20mln in initiatives that will directly benefit its workforce
Frying pan
CEO Gene Lee is fired up about his US$20mln workforce initiative

Darden Restaurants Inc (NYSE:DRI) has increased its profits outlook for the current financial year as a result of impending changes to the tax system.

The restaurants operator expects adjusted diluted net earnings per share from continuing operations to fall somewhere between US$4.70 and US$4.78 in the year to the end of August.

READ: Olive Garden owner Darden Restaurants rallies as it serves up quarterly earnings beat

Darden said that was after a planned investment of around US$20mln in its workforce this fiscal year.

It is also set to enjoy a windfall as a result of recent tax changes that will require the company to revalue its deferred tax assets and deferred tax liabilities to account for the future impact of lower corporate tax rates on these deferred amounts.

Based upon a preliminary analysis, the company estimates that it will record non-cash net tax benefits of about US$70mln, equivalent to around 56 US cents a share, related to the revaluation of these deferred tax items.

“One of the best investments we can make is in our people," said Gene Lee, the chief executive officer of Darden.

"During the remainder of fiscal 2018, we will invest approximately $20 million in initiatives directly benefitting our workforce. This investment will strengthen one of our most important competitive advantages – a results-oriented culture – as we continue to improve on the guest experience, and position Darden and our brands for long-term success," he added.

Shares in Darden were up 1% at US$100.26 in pre-market trading. In the regular session, shares lost 0.23% to US$99.08.

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