Darden Restaurants (DRI) stock sank about 4% in Monday morning trading after the company said that it will continue with plans to separate its Red Lobster chain and issued weaker-than-expected profit guidance for the third quarter.
DRI stock slid after the company rejected pressure from Barrington Capital Group and Starboard Value to reconsider selling or spinning off Red Lobster. The two activist investment firms say that DRI shareholders should be allowed to vote of the plan. Together Barrington and Starboard Value hold about 7.5% of DRI stock, Reuters notes.
Plans to separate Red Lobster were first announced late last year. DRI says that after reviewing its options, it plans to continue to pursue either a sale of Red Lobster or a tax-free spin-off of the chain to DRI shareholders.
DRI also announced on Monday that it anticipates a profit of 82 cents for the third-quarter. That was well below the earnings of 93 cents Wall Street was looking for. DRI attributed the lower performance to inclement weather during the quarter that kept customers away from restaurants.
On Friday, DRI stock closed at $51.06 a share. DRI stock has gained more than 10% over the past year.