DRI stock took a massive hit today after Darden Restaurants (DRI) announced that it is planning on parting ways with Red Lobster.Overall, Darden stock has failed to meet YTD expectations with its second-quarter net income down to 15 cents per share from 26 cents per share a year earlier. Analysts polled by FactSet predicted earnings of 20 cents per share for the fiscal year. DRI stock rose in pre-market trading Thursday before suffering a mid-morning 6% dip.
The stock’s poor performance comes in light of the company’s announcement to spin off or sell Red Lobster to boost its stock value. Darden Restaurants made the decision after failing to attract high-income customers the way its other brands have. The seafood chain has also suffered from the rise of cheaper and faster chain restaurants such as Chipotle.
Red Lobster currently has 705 restaurants in the U.S. and Canada.