- Shares drop as much as 25% to lowest in almost four years
- Strategic review underway amid profit blow and CFO departure
Restaurant Group Plc shares plunged in London after the U.K. owner of Frankie & Benny’s eateries forecast another hit to profits amid deteriorating sales.
The stock fell as much as 25 percent to 282.1 pence, the lowest in almost four years. It was down 23 percent at 10:52 a.m., extending its drop this year to 58 percent.
After more than a decade of consistent revenue and earnings growth, Restaurant Group is stumbling amid increased competition from rival casual dining chains and a drop in visitors to U.K. retail parks, where many of its outlets are located. The company, whose brands also include Chiquito and Garfunkel’s, announced Friday that it has started a strategic review and said Chief Financial Officer Stephen Critoph is leaving after 11 years.
“Frankie & Benny’s has been the main drag, with issues of brand relevance, lower footfall and site cannibalization contributing to the decline,” Ali Naqvi, an analyst at Peel Hunt, said in a note.
Restaurant Group said it will open more than 30 outlets this year, though fewer than the 44 it unveiled in the previous 12 months.
Like-for-like sales in the 17 weeks ended April 24 declined 2.7 percent.
“In the short term, we do not anticipate any improvement to underlying like-for-like trends,” the company said, forecasting a drop for the year of 2.5 percent to 5 percent.
Pretax profit is now expected to be in a range of 74 million pounds ($108 million) to 80 million pounds, less than the median analyst estimate of about 88 million pounds. Peel Hunt’s Naqvi said he plans to cut his estimate to 72.9 million pounds.