Leading analyst Simon French at Cenkos has said he expects The Restaurant Group (TRG) to confirm the disposal of up to 40 sites and the removal of up to £5m head office costs, when the company updates the market with its H1 results this Friday (26 August)
French said: “We expect a 12% decline in underlying PBT (on a 27-week basis) to £32.5m and a similar cut in the dividend to 6.0p. The recent appointment of Andy McCue has reduced some of the pressure on the Board and investors will give Mr McCue the time he needs to turn the company around.
“As a start we expect the group to confirm alongside the results the disposal of up to 40 sites and the removal of up to £5m head office costs which were put in place over the past 18 months to support an accelerated new store opening programme, since scaled back. This will provide solid foundations from which to permanently reinvest in food and labour cost in Frankie & Benny’s.
“The stock has rallied strongly to trade on a 2017E adj EV/EBITDAR of 7.3x but this is still inexpensive relative to the peer group, Buy.”
