The Restaurant Group PLC (LON:RTN) soared higher this morning after it saw its sales decline moderate in the first quarter, with a significant improvement from the end of last year, and said it continues to expect full-year profits to be in line with current market expectations.
In a trading update for the 20 weeks to May 21, the FTSE 250-listed firm said its like-for-like sales fell 1.8%, with its total sales down 1.5%.
But that compared to a 3.9% like-for-like fall last year and a 5.9% drop in the fourth quarter, and beat market expectations for a 6%-7% decline this time out.
In early morning trading, Restaurant Group shares topped the FTSE 250 leader board, leaping 9%, or 28.8p higher to 346.2p.
In a note to clients reiterating a ‘buy’ rating and 430p price target on Restaurant Grouo shares, Liberum Capital analyst Anna Barnfather said: “The stock has fallen - 9.7% over the last month to now trade on 2017E EV/EBITDA of 7.5x versus peers on 10.2x.
“We believe this update will reassure the market and do not expect numbers to move today.”
Concession, Pubs businesses see strong performances
In the statement ahead of the company's annual shareholder meeting today, Restaurant Group chairman, Debbie Hewitt said: “In the period we saw strong performances from our Concessions business, benefitting from strong growth in passenger numbers, and from our Pubs business, helped by favourable weather.”
She added: “We continue to be focused on the turnaround of the Leisure businesses which benefited from cinema admissions having a good start to the year.
“Over the remainder of the year, growth in passenger numbers and cinema admissions is anticipated to moderate.”
The group’s leisure business includes chains such as Frankie & Benny's, Garfunkel's and Joe's Kitchen and many are based in shopping and leisure parks including cinemas.
Strategy implementation progressing well
Hewitt added: "The implementation of our strategy is progressing well as we make the required investments in price, marketing and our offer.”
She reiterated that 2017 is a transitional year for the group but said that its cash flow and balance sheet remain strong.
The chairman concluded that management continue to expect that full year pre-tax profit will be in-line with current market expectations.