Restaurant Group falls as Wagamama's UK sales slow
Restaurant Group was under the cosh on Monday as investors a mulled a second-quarter trading update from its restaurant chain Wagamama.
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In the 22 weeks to 29 September, UK sales at the noodle chain were up 6.3% on a like-for-like basis, while US sales were 12.5% higher.
Citi noted that this was a marked slowdown from the 12.9% UK LFL growth reported in the first quarter, albeit against tougher comparatives.
Turnover rose 11% during the quarter to £93.5m and adjusted earnings before interest, taxes, depreciation and amortisation increased 27.2% to £16.7m.
Chief executive officer Emma Woods said: "Great businesses are built from dedicated people, a commitment to always be on the side of their customers and a galvanising sense of purpose. Wagamama has always followed this model, and I am thrilled to say has delivered another quarter of strong outperformance versus the market with a number of record restaurant sales weeks.
"We look forward to 2020, and whilst we don’t expect to be immune to the various headwinds facing our industry, we will stay true to our positive culture and growth mindset."
Broker Liberum said the update was "solid" but highlighted a slowdown in the wider casual dining market, which it said impacts Restaurant Group’s other brands.
Meanwhile, Shore Capital said that in a barely growing market, it was encouraged by the continued "strong performance" from Wagamama post acquisition.
"The performance from Wagamama in the period is consistent, if not slightly ahead, of our full year expectations, with the division including overheads accounting for circa 40% of group EBITDA. We forecast EBITDA of circa £58m for the full year," it said.
At 0850 GMT, the shares were down 3.1% at 141.50p.