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Thai Union’s Thiraphong Chansiri: "Minimal Expectations from Red Lobster Sale", Says Official

In statements made during an investor call on February 19th and reiterated at a subsequent shareholder meeting, Thai Union Group CEO Thiraphong Chansiri revealed that the company does not anticipate significant financial gains from the sale of Red Lobster. Chansiri indicated that despite the casual dining chain's extensive presence with approximately 560 locations worldwide, primarily in the U.S., any proceeds from the sale are expected to be modest.

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Thai Union’s Thiraphong Chansiri: "Minimal Expectations from Red Lobster Sale", Says Official
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Thai Union Group announced its intention in January 2024 to pursue an exit from its strategic partnership and minority investment in Red Lobster Master Holdings, held since 2016. With approximately 38 percent ownership of Red Lobster, Thai Union increased its investment in 2020 and holds preferred stock convertible into another 24 percent shareholding. However, the company plans to divest from Red Lobster due to substantial losses.
CEO Thiraphong Chansiri stated, "Red Lobster is done and over with," expressing minimal expectations for financial gain from the impending sale. Thai Union intends to engage an external firm to manage the sale process, expected to take three to four months.
In 2023, Red Lobster incurred over USD 22 million in losses, surpassing forecasts by USD 3 million. Chansiri clarified that Thai Union's direct supply connection to Red Lobster is limited to shrimp, with plans to redirect these products to other buyers post-divestment.
Bloomberg Intelligence analysts foresee potential earnings recovery for Thai Union in 2024, driven by improved sales of canned, frozen, and chilled seafood. Despite the Red Lobster divestment, Thai Union holds various brands, including Chicken of the Sea and John West.
At its shareholder meeting, Thai Union obtained approval for amendments to interest-coverage ratio and dividend-cap restrictions on notes, partly prompted by an impairment charge of THB 18.5 billion in Q4 2023 related to Red Lobster.
While Red Lobster's performance was described as "okay," CFO Ludovic Garnier emphasized the chain's ongoing profitability struggles, despite managerial interventions. Chansiri expressed disappointment with the decision to divest, citing the need to move away from a business no longer aligning with Thai Union's strategy.
Chansiri's experience with Red Lobster left a significant impact, with a desire to distance from the chain, particularly concerning dietary restrictions. Meanwhile, Red Lobster launched a promotional contest to boost engagement despite financial setbacks, offering diners an indulgent culinary experience featuring lobster dishes.
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