Thiraphong Chansiri, CEO of Thai Union Group, has tempered expectations regarding the potential proceeds from the sale of Red Lobster. Speaking during an investor call on February 19th and later at a shareholder meeting, Chansiri indicated that the company does not anticipate significant gains from divesting its stake in the casual dining chain, which boasts approximately 560 locations worldwide, predominantly in the U.S.
Thai Union's decision to pursue an exit from its strategic partnership and minority investment in Red Lobster Master Holdings, announced in January 2024, reflects a strategic shift. Despite holding a 38 percent ownership stake in Red Lobster, with an option to convert preferred stock into an additional 24 percent shareholding, Chansiri emphasized that the company is prepared to relinquish its ties to the chain.
"Red Lobster is no longer a priority," stated Chansiri. "We are simply awaiting the sale, but we do not foresee significant financial gains."
The sale process is expected to be overseen by an external firm, with Chansiri estimating a timeframe of three to four months for completion. Thai Union's decision to part ways with Red Lobster follows substantial losses incurred in 2023, totaling over USD 22 million, attributed to operating challenges and adverse market conditions.
While Thai Union's direct supply connection to Red Lobster primarily involves shrimp, Chansiri underscored the limited financial impact of this aspect of the partnership. Following the divestment, Thai Union plans to redirect its shrimp products to alternative buyers, anticipating enhanced profitability.
Bloomberg Intelligence analysts Lisa Lee and Lea El-Hage anticipate a potential rebound in Thai Union's earnings growth in 2024, buoyed by improved sales across its diverse portfolio of seafood brands. Despite the setbacks associated with Red Lobster, Thai Union remains optimistic about the prospects for its other ventures, including Chicken of the Sea, John West, and Sealect brands.
The decision to divest from Red Lobster, while regrettable, reflects Thai Union's commitment to strategic realignment and sustainable growth, according to CFO Ludovic Garnier. He acknowledged the challenges faced by Red Lobster in achieving profitability, despite efforts to revamp its menu and operational strategies.
Chansiri candidly acknowledged the disappointment stemming from Thai Union's experience with Red Lobster, expressing a desire to distance the company from the chain's struggles. Reflecting on the impact of Red Lobster's underperforming promotions, such as the Ultimate Endless Shrimp campaign, Chansiri emphasized the need for a forward-looking approach to ensure sustained success in the seafood industry.
As Thai Union navigates the complexities of divesting from Red Lobster, the company remains focused on leveraging its strengths and pursuing opportunities for growth across its diversified portfolio.
Source: Cliff White (Mar 05, 2024). Thai Union’s Thiraphong Chansiri: “We're not expecting to get anything much from the sale” of Red Lobster. Business and Finance. https://www.seafoodsource.com/news/business-finance/thai-union-s-thiraphong-chansiri-we-re-not-expecting-to-get-anything-much-from-the-sale-of-red-lobster?utm_source=marketo&utm_medium=email&utm_campaign=newsletter&utm_content=newsletter&mkt_tok=NzU2LUZXSi0wNjEAAAGRrXjT1KQ0fTBrNc-kBrbqrWoJcoGaq2iaVhTc3jY8W2-R4kzdaPglJzLcCVcZEVXGboG88ZnaKrO9mnfu9L2PBlNGnW2pgPArhtt_yGsmWOQ7LnOD6g
