The Restaurant Group PLC (LON:RTN) reported increased sales for the first part of 2019 on Friday as it continued to reap the benefits of its Wagamama acquisition, although investors were still to be convinced as its shares reversed early gains.
In a trading update ahead of its AGM on Friday, the FTSE 250-listed firm - which also owns Frankie & Benny’s - said trading in the 19 weeks to 12 May had been in line with its expectations as like-for-like (LFL) sales increased 2.8% while overall sales jumped 57%.
RTN said the sales surge reflected “strong performances” from Wagamama, which had continued to “significantly outperform” in its core UK market, and from the company’s pubs business, which had consistently traded ahead of the pub restaurant sector.
The company acquired Wagamama in November last year in a controversial £550mln deal that saw nearly 40% of its voting shareholders oppose the move.
Meanwhile, the company said its concessions business had “traded well” and that it remained focused on optimising its leisure arm against what it said was a “declining market”.
Looking forward, RTN said it was “comfortable” with its performance so far in 2019 and would continue to focus on “realising the synergies from the Wagamama acquisition, executing on our multi-pronged growth strategy and optimising our Leisure business”.
In a note to clients, analysts at Peel Hunt reiterated their ‘hold’ rating and 145p price target on the stock, saying it was “fairly valued…given that we believe there is downward forecast risk due to the sector backdrop and tougher [comparatives] ahead”.
After rising in morning trading, however, Restaurant Group shares drifted 1.1% lower to 128.40p.
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