Restaurant Group H1 sales drop but on track for full year

31st Aug 2018 10:49

(Sharecast News) - Garfunkel's and Frankie & Benny's owner Restaurant Group posted a drop in first-half sales and profit on Friday but said it was still on track to meet current market expectations for the full year following a more solid recent performance.In the 26 weeks to 1 July, total sales fell 2.1% to £326.1m and like-for-like sales were 3.7% lower. The company attributed the drop in LFL sales to the investments it made in price and proposition across its leisure brands last year, adverse weather and the World Cup.Adjusted pre-tax profit declined to £20.1m from £25.5m in the same period a year ago, and adjusted earnings before interest, taxes, depreciation and amortisation came in at £38.1m versus £44.3m. The group maintained its interim dividend at 6.8p a share.The company said it has continued to make good progress on its cost efficiency plans and expects to mitigate around 50% of the gross cost headwinds of £18m. Given better current trading, which has seen LFL sales up 2.4% for the six weeks to 26 August, it expects to deliver an adjusted pre-tax profit outcome for the full year broadly in-line with current market expectations.Including the acquisitions of Ribble Valley Inns and Food & Fuel, it now expects to open at least 39 new sites in 2018 with associated capital expenditure of between £45m and £50m. Refurbishment and maintenance capital expenditure in 2018 is expected to be between £20m and £25m. Chief executive officer Andy McCue said: "Over the last six months we have delivered against our strategy, creating a more competitive and balanced business, more closely aligned to the growth segments of our market."The turnaround of our leisure division continues to plan and shows further progress. This was despite the headwinds facing the sector as a whole and the adverse effects of extreme weather and the World Cup."Meanwhile our pubs and Concessions businesses have traded strongly, with both businesses expected to deliver significant total sales growth this year. Our recent acquisition of Food & Fuel Ltd will further accelerate our growth at the premium end of the pub market."At 1045 BST, the shares were up 3.2% to 284p.