29th Apr 2016 08:32
LONDON (Alliance News) - Restaurant Group's profit warning on Friday, its second in as many months, likely will lead to double-digit downgrades to N+1 Singer's profit forecasts, as the group continues to experience a deterioration in trading conditions.
The restaurant operator, which runs the Frankie & Benny's, Chiquito and Garfunkel's chains, said it is continuing to see a deterioration in trading conditions in financial 2016 so far, particularly in the leisure business, something it warned about as well at the release of its financial 2015 results last month.
N+1 analyst Sahill Shan said he will review the broker's forecasts but initially estimates a 10% downgrade for full-year adjusted pretax profit to GBP75.0 million, and for it to remain flat in financial year 2017. In its results for the year that ended December 27, 2015, Restaurant Group reported a pretax profit of GBP86.8 million.
Shan said it is safe to say the group's restaurant roll-out programme will be downsized in the company's structural review, but beyond this it remains to be seen if there will be any restructuring of the estate. Restaurant Group said it anticipates more than 30 site openings for the rest of the year, fewer than the 44 opened last financial year.
N+1 maintained its Sell rating and 330.00 pence price target.
Restaurant Group was the worst performing stock in the FTSE 250, down 23% at 289.05p on Friday.
By Neil Thakrar; [email protected]; @NeilThakrar1
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