Posted: Friday, December 20th 2013 at 6:34am
Darden looking to spin off or sell Red Lobster
By The Associated Press
NEW YORK (AP) — Darden Restaurants wants to set Red Lobster adrift.
The company said Thursday that it is looking to either spin off or sell Red Lobster as part of its plan to boost value for its shareholders. Those plans also include suspending the opening of new Olive Garden locations and limiting the launch of new LongHorn Steakhouse restaurants.
Darden Restaurants Inc. also won't make any acquisitions of additional brands "for the foreseeable future" and will review senior management's compensation and incentive programs to put greater emphasis on same-store restaurant sales growth and free cash flow.
Its stock fell about 4 percent to close at $51.02 Thursday.
Darden Chairman and CEO Clarence Otis said during a conference call on Thursday that Red Lobster has been unable to capture high-income customers as much as its other brands have. A separation will give Red Lobster the opportunity to focus more on its core audience. He also said changing market conditions prompted action, noting the "relatively low levels of consumer demand in each of the past several years for restaurants generally, and for casual dining in particular, as well as additional unexpected softness since June." Otis added that the company has been considering its options for Red Lobster for some time and shareholders wanted changes.
The planned Red Lobster spinoff still needs final approval from Darden's board. It does not require a shareholder vote. The company expects any possible separation to close in early fiscal 2015.
Associated Categories: Business News
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