NEW YORK (
TheStreet's Jim Cramer, co-manager of the
Action Alerts PLUS portfolio, discussed
(DRI) Monday after it announced it expects to earn 82 cents per share in the third quarter.
Analysts expected the company to earn 93 cents. Darden Restaurants' management blamed, in part, the severe winter weather for the slowdown in traffic.
Despite the lower-than-expected earnings warning, Cramer pointed out that same-store sales are actually improving for Red Lobster, the restaurant segment that is a current spinoff candidate. Same-store sales were down 10% in December and down 12% in January, but increased to down 4.5% in February.
Herein lies the problem with spinning off Red Lobster, Cramer said. When a company spins off a specific entity, it's usually done to unlock value for shareholders. But in this instance, "who would want this Red Lobster piece?" Cramer asked.
While Darden Restaurants would be stronger without Red Lobster, it's hard to imagine anyone would want to be a shareholder or private owner of the struggling seafood restaurant, Cramer concluded.
- - Written by Bret Kenwell in Petoskey, Mich.
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