A spike in shrimp costs is causing yet more trouble for Red Lobster.
The seafood chain’s parent company Darden Restaurants today reported a lower quarterly profit in line with its previously announced estimates. Sales at its struggling Olive Garden and Red Lobster chains dropped by 5.4 percent and 8.8 percent respectively, as reported on March 3.
The Orlando-based company has been fighting to win back customers at its flagship chains and has said it will spin off or sell Red Lobster to focus its attention on fixing Olive Garden with a revamped menu and marketing. Both chains have been losing customers as more affordable alternatives such as Chipotle have gained in popularity.
But in recent months, another factor weighing on Red Lobster was higher shrimp costs. Executives said that costs in the quarter rose about 30 percent because a “production issues in Asia.” They said don’t expect relief until the early part of its fiscal 2015 year.
On an annual basis, Chief Financial Officer Brad Richmond said the company is facing a $30 million increase in shrimp costs.Pilots favor strike
Deutsche Lufthansa AG pilots voted to go on strike in a dispute over pay and retirement benefits at Europe’s second-largest airline, complicating a turnaround plan for incoming Chief Executive Officer Carsten Spohr.
The Vereinigung Cockpit said the 5,400 pilots at the company’s main passenger airline backed a walkout that may come at any time, while providing a 48-hour warning and avoiding disruptions during the busy Easter holidays, spokesman Thomas von Sturm said today in Frankfurt, where Lufthansa is based.
Lufthansa, seeking to more than triple operating profit by next year, wants pilots to accept pay raises tied to financial performance for three years, That may limit annual increases from nothing to 6 percent through 2015. It has also revised terms for pensions and early retirement.
“Lufthansa’s management has set itself under so much pressure with their overblown profit goals that they are no longer in a position to carry out sensible tariff negotiations,” von Sturm said. “We’ve been negotiating for two years now and and our patience is exhausted.”
All the measures are aimed at boosting productivity to enhance competitiveness, personnel manager Peter Gerber said. Spohr, who oversees the main airline unit, takes over next month, inheriting a sweeping savings plan initiated by his predecessor Christoph Franz, who is joining Roche Holding AG.
Pilots want raises that at least cover inflation and have criticized the company for seeking high dividends for investors at the expense of employees. Negotiations were last held in December and the latest round hasn’t been set.Inflation dip in Canada
Canada’s inflation rate slowed to close to the bottom of the central bank’s target band last month on lower gasoline and clothing prices.
The consumer price index rose 1.1 percent in February from a year ago following a 1.5 percent January increase, Statistics Canada said today from Ottawa. The core rate, which excludes eight volatile products, increased 1.2 percent after a gain of 1.4 percent the prior month. Economists surveyed by Bloomberg forecast that the total rate would slow to 1.0 percent and that core inflation would be 1.1 percent.Barra to testify
General Motors Co. Chief Executive Officer Mary Barra is scheduled to testify at a U.S. congressional hearing April 1 amid a probe into why it took more than a decade to recall vehicles equipped with an ignition defect that’s been linked to a dozen deaths.
National Highway Traffic Safety Administration Acting Administrator David Friedman will also testify to the Oversight and Investigations Subcommittee of the House Energy and Commerce Committee, Fred Upton, the committee’s chairman and a Michigan Republican, said in a statement yesterday.
“Their testimony is critical to understanding what the company and NHTSA knew about the safety problems, when they knew it, and what was done about it,” Upton said. “We want to know if this tragedy could have been prevented and what can be done to ensure the loss of life due to safety failures like this don’t happen again.”
GM was aware as long ago as 2001 that the switches could slip out of position, cutting off power. Barra said March 18 she first learned about an analysis of the stalling cars in December, weeks before she become CEO, and that she was informed of the decision to recall cars on Jan. 31.
Barra, who became Detroit-based GM’s first female CEO this year, has apologized for the lives lost and has said there would be “no sacred cows” in the company’s investigation into a failure tied to at least 31 accidents and 12 deaths.Fed dissenter backs low rate
A Federal Reserve official who dissented from this week’s policy decision says the Fed should have outlined a plan to keep a key interest rate at a record low until unemployment falls below 5.5 percent.
The Fed’s policy statement no longer cites a specific unemployment rate that might lead it eventually to raise short-term rates. The Fed instead says it will monitor a range of information before approving any rate increase.
Narayana Kocherlakota, president of the Fed’s Minneapolis bank, says this shift, approved 8-1, will foster uncertainty.
In a statement today, Kocherlakota says lowering the threshold for considering a rate hike from 6.5 percent unemployment to 5.5 percent would have enhanced the Fed’s commitment to low rates until inflation nears its 2 percent target. The unemployment rate is 6.7 percent.Swipe fee cap upheld
The Federal Reserve acted within its authority when it capped debit card swipe fees at about 21 cents, a federal appeals court said, handing a defeat to retailers in their multi-billion-dollar fight with banks over transaction costs.
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