(Alliance News) - Frankie & Benny's owner Restaurant Group said Friday the UK's tiering restrictions makes the outlook for the first quarter of 2021 "extremely challenging", while Fulham Shore, the company behind the Franco Manca and The Real Greek restaurants, said it is looking to take advantage of lower rents to expand once the virus situation improves.
Casual dining chain owner Restaurant Group, which also owns Wagamama, said cashburn during the November national lockdown was minimised to GBP5.5 million for the month. The company said it expects further"significant disruption" to trading whilst tiering restrictions remain in place.
"As per the latest tiering restrictions announced by the UK government, The group will have approximately 145 sites which will trade for dine-in across the UK, 142 sites which will provide delivery and takeaway services only, with the remaining 103 sites closed," said Restaurant Group.
The tiering restrictions makes the outlook for the first quarter of 2021 "extremely challenging", but the board is encouraged by vaccine progress.
"The board believes the group is well positioned to benefit from a sustained removal of restrictions given its previous strong trading performance following the first lockdown. We therefore expect a strong recovery when there is a return to more normal levels of customer activity," Restaurant Group said.
Meanwhile, Fulham Shore reported half-year results to September 27. It swung to GBP4.3 million pretax loss from a GBP743,000 profit a year before, as revenue dropped by almost half to GBP19.9 million from GBP36.0 million.
The company said most of its 72 restaurants across the UK are either closed or offering take-away only. It noted that 58 of its restaurants are in Tier 3 areas, with 7 of these fully closed.
More positively, it has opened 2 new restaurants since the end of September and at a lower-than-normal cost. "The ongoing damage to the property and restaurant sectors will allow us to prospect for new sites at much reduced rents and with lower capital costs per site," Fulham Shore said. "The two restaurants we have recently opened cost us less than half of the typical outlay of a year ago."
Once normal trading resumes, it added, it will target a higher return on capital than it has achieved historically.
Shares in Restaurant Group were down 4.7% early Friday, while Fulham Shore was down 3.0%.
Here is what you need to know at the London market open:
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MARKETS
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FTSE 100: up 0.1% at 6,551.64
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Hang Seng: down 1.0% at 26,415.45
Nikkei 225: closed down 0.2% at 26,763.39
DJIA: closed up 148.83 points, 0.5%, at 30,303.37
S&P 500: closed up 0.6% at 3,722.48
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GBP: down at USD1.3528 (USD1.3600)
EUR: firm at USD1.2250 (USD1.2242)
Gold: down at USD1,881.21 per ounce (USD1,888.75)
Oil (Brent): soft at USD51.28 a barrel (USD51.45)
(changes since previous London equities close)
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ECONOMICS AND GENERAL
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Friday's Key Economic Events still to come
1100 GMT UK CBI industrial trends survey
1200 GMT UK Bank of England quarterly bulletin
1000 CET EU Euro area balance of payments
1000 CET Germany Ifo business climate index
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UK retail sales fell in November, a month which saw many shops shuttered due to fresh virus restrictions, the Office for National Statistics said. Month-on-month, retail sales volumes fell 3.8%, reversing a 1.3% increase in October and ending six consecutive months of growth within the retail sector. The ONS did note that despite November's monthly fall, overall sales remain above pre-pandemic levels. Non-essential shops in England were ordered to shut in November as the country entered a second national lockdown. Clothing store sales saw a sharp fall in sales, down 19% month-on-month, while fuel sales fell 17%. Food stores, at 3.1%, and household goods stores, at 1.6%, were the only sectors to show monthly growth.
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UK consumer confidence managed a notable rise in December, Gfk Consumer Confidence index data showed, with all five measures improving from the month before. In December, Gfk's consumer confidence index rose seven points to minus 26, improving from minus 33 in November and minus 31 in October. It did, however, lag far behind December 2019's minus 11 reading. The Personal Financial Situation index over the last 12 months, among the overall index's components, improved to minus 9 in December from minus 16 in November, but was still behind the prior year's minus 3 figure.
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The German economy is ending the year on a downbeat note, with a key indicator to be released on Friday expected to show business confidence falling for the third consecutive month due to pandemic restrictions. The Munich-based Ifo institute is to release its business climate index, which is expected to have fallen to 90.0 in December, down from 90.7 in November, raising the prospect of a fresh slump in Europe's biggest economy. The latest report, which is based on a survey of 9,000 executives across Germany, comes after the government again imposed tough measures to head off a renewed surge in coronavirus cases.
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US President-elect Joe Biden has nominated Congresswoman Deb Haaland as head of the Interior Department, Biden's transition team said. If Haaland - who belongs to the Laguna Pueblo tribe - is confirmed by the Senate, she would become the first Native American to hold a national cabinet post. The Biden transition team called Haaland "a barrier-breaking public servant who has spent her career fighting for families, including in Tribal Nations, rural communities, and communities of color." The Interior Department is primarily responsible for the administration of federally owned land. The ministry decides, for example, whether nature reserves are designated or whether energy generation such as fracking is permitted. The transition team of Biden and Vice President-elect Kamala Harris also announced other key nominations and appointments of its climate team: Governor Jennifer Granholm as Secretary of Energy; Michael Regan as EPA Administrator; Brenda Mallory as Chair of the Council on Environmental Quality; Administrator Gina McCarthy as National Climate Advisor; and Ali Zaidi as Deputy National Climate Advisor.
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Biden expressed full confidence in his son Hunter, a frequent target of Republican attacks, after it was revealed last week that he was under a federal tax investigation. During his unsuccessful re-election campaign, President Donald Trump launched repeated accusations against Hunter and said the Bidens were a "corrupt" family and a "criminal enterprise". "We have great confidence in our son," Biden said, sitting next to his wife Jill, in an interview on "The Late Show with Stephen Colbert," which aired Thursday on CBS. "I am not concerned about any accusations that have been made against him. It used to get to me. I think it's kind of foul play but...as long as he's good, we're good," he said in his first full remarks on the issue since the tax probe became public.
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BROKER RATING CHANGES
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BARCLAYS CUTS PETROFAC TO 'EQUAL WEIGHT' (OVERWEIGHT) - TARGET 230 (330) PENCE
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BERNSTEIN RAISES SMITH & NEPHEW TO 'OUTPERFORM' (MARKET-PERFORM); TARGET 1,750 (1,400) PENCE
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COMPANIES - FTSE 100
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Halma said it has sold Fiberguide Industries to Molex for a cash consideration of USD38 million. Fiberguide, which was acquired by the London-listed hazard detection and life protection technologies manufacturer in 2008, is a manufacturer of fibre optic technology headquartered in the US state of Idaho. Molex is "closely aligned" to Fiberguide's core business, said Halma. "We are confident that this will help Fiberguide better serve its customers, employees and suppliers while enabling Halma to continue to invest in high growth businesses that are closely aligned with our purpose," said Halma Chief Executive Andrew Williams.
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British Land said it has completed the drawdown of the 500-year headlease with Southwark Council, a "significant milestone". The headlease will combine the ownership of British Land's assets at Canada Water in south east London into a single 500-year headlease, with Southwark Council as the lessor. "British Land's new 500-year headlease will allow comprehensive redevelopment and investment in the site with Southwark Council owning an initial 20% interest and with the ability to participate in the development, up to a maximum of 20% with returns and ownership pro-rated accordingly," the property developer said. British Land added that it has signed signed its first pre-let at Canada Water with new higher education enterprise, TEDI-London. TEDI-London will take an initial 13,000 square feet of floorspace, with the option to expand up to 40,000 square feet.
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COMPANIES - GLOBAL
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Regeneron Pharmaceuticals, a New York-based biotechnology company, said that data from ongoing trials of its antibody cocktail casirivimab and imdevimab in non-hospitalised patients with Covid-19 have yielded positive results. The data show that the cocktail "effectively reduced viral load and the need for medically-attended visits, with the greatest benefit in patients who had not yet mounted their own effective immune response or had high viral load at baseline". The results were published by the New England Journal of Medicine.
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Friday's Shareholder Meetings
Playtech PLC - GM re tax residency migration
Wey Education PLC - AGM
Gfinity PLC - AGM
Merian Chrysalis Investment Co Ltd - GM re name change to Chrysalis Investments Ltd
PetroNeft Resources PLC - AGM
Informa PLC - AGM
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By Tom Waite; thomaslwaite@alliancenews.com
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