The Restaurant Group has provided its trading update for the 45 weeks to 9 November 2014 together with a commentary on the outlook for the remainder of the financial year (52 weeks to 28 December 2014), reporting like-for-like sales 3.0% ahead.
Douglas Jack of Numis commented: “Although we are cautiously trimming 2014E forecasts, prospects for 2015E remain strong. RTN should benefit from easy cinema, weather and sports-related comps and strong cinema releases. Also, falling food and fuel costs are not only benefiting the company directly, but also through helping customers’ real incomes start to grow.”
Current trading
Since the half-year results announcement at the end of August, the Group has continued to make progress. After 45 weeks trade in 2014, total sales are 10.3% ahead of the comparable period in 2013 and like-for-like sales are 3.0% ahead.
New Openings
24 new restaurants opened in 2014 to date. These are performing well and are set to deliver strong returns in line with the usual targets. A further 16 sites are expected to open before the end of the year, taking the total to 40 new sites in 2014 (2013: 35). The pre-opening costs for these and a number of new sites that will open in January 2015 will be incurred in the last quarter of the current year. The pipeline of new site openings continues to improve and the rate of new openings in 2015. Is expected to further strengthen.
Balance sheet and financing
The Group’s balance sheet position remains strong and cash continues to be generated at levels which allow the Group to maintain investment in the existing portfolio and open new restaurants.
Outlook
“We remain confident that the business will continue to make good progress during the remainder of the year, although sales have shown lower growth since the end of August and we are seeing some cost pressures. Nevertheless, we still expect to report good full year results, showing material progress on the prior year.”