‘Spoons had originally expected like-for-like sales growth of 4.0% to be enough to match last year’s record profits.
Same-pub sales were up 6.3% at the end of January, but that won’t be enough to maintain the bottom line, after the value pub chain had to hike staff pay in November amid a tight jobs market.
At the time, chairman Tim Martin said that pre-tax profits would be “lower than same period last year” as a result of the higher costs.
Investors will want to see that the strong top-line growth has continued into the start of the second half. If sales have been good enough, who knows, bosses might be able to revert to their original guidance.
Berkeley vs Brexit
In December, the housebuilder raised its profit guidance for 2019 after a “resilient start to the year” despite demand in the London and south-east property market being hit by uncertainty on the outlook for the UK economy.
In the first half, profit dropped to £401.2mln from £539.9mln a year ago and revenue fell to £1.65bn from £1.66bn.
Berkeley said the London and south-east property market “lacks urgency” while higher taxes and mortgage restrictions had also dampened demand.
UBS does not expect any major changes to the update provided with December’s interims, with its full-year 2019 pre-tax profit forecast for Berkeley at £730mln, against guidance for £710mln to £730mln, and a net cash estimate of around £850m.
All eyes on Wagamama
Shares have fallen to nine-year lows of late, not helped by the shock departure of chief executive Andy McCue – the man in charge of bringing Wagamama under the Restaurant Group umbrella.
The share price plunge is reflective of the City’s view that the company, which also owns Frankie and Benny’s, has bitten off more than it can chew.
Back in January, Restaurant Group said Wagamama had “continued to trade well” over Christmas which helped annual sales to climb 1% versus 2017. Will that uptick from Wagamama be enough to justify the price tag though?
On the plus side, sales comparatives are relatively soft, notes City broker Peel Hunt, while February trading should also have benefitted from the better weather.
Significant events expected onFriday March 15:
Interims: JD Wetherspoon PLC (LON:JDW)
Finals: Restaurant Group PLC (LON:RTN), Eurocell PLC (LON:ECEL)
Economic data: UK trade in goods data; US industrial production; US manufacturing production; US NY Empire State manufacturing index; University of Michigan US preliminary consumer confidence index