Darden Plans to Spin Off or Sell Struggling Red Lobster
Posted in: UncategorizedDarden Restaurants, owner of the Olive Garden and LongHorn Steakhouse chains, plans to separate its Red Lobster business, cut marketing spending on the chain, halt acquisitions and cut expenses as restaurant sales lose momentum.
Orlando-based Darden said today in a statement that while it expects to execute a tax-free spinoff of Red Lobster to shareholders, the company also may consider selling the business. Sales at Red Lobster, a seafood chain with 705 locations in the U.S. and Canada, fell 1.9% to $2.62 billion in the year through May 26.
U.S. Same-store sales slid 4.5 % at Red Lobster in the most recent quarter. U.S. sales increased 5.0% at LongHorn Steakhouse and declined 0.6% at Olive Garden. Analysts had projected a drop of 2.1% for Red Lobster. The company said on a conference call today that Red Lobster’s comparable-store sales would fall as much as 5% in the current fiscal year.
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