(Alliance News) - UK government advice to work from home in December and avoid large gatherings emptied pubs, restaurants and entertainment venues during their most important month of the year, but the resulting sell-off of travel & leisure stocks has left some bargains, Peel Hunt said on Wednesday.
"With the government backbenchers revolting against further restrictions and lockdowns, this is one January Sale we believe investors should not miss," the broker said.
Tasty PLC on Tuesday confirmed what investors had suspected from anecdotal evidence. The operator of the dim t and Wildwood casual dining chains said the Omicron variant "significantly reduced" the number of customers in its restaurants. December, usually its strongest month, suffered "disappointing" trading as infection rates rose and the UK government reinstated working from home advice.
There were "significantly reduced" numbers of those eating out as a result, while Christmas bookings also were hit.
"As a consequence, trading for the peak December trading period was considerably weaker than anticipated," Tasty said.
More positively, in the 11 months up until December, trading had been "extremely encouraging", Tasty said.
Tasty shares were up 0.4% at 5.15 pence Tuesday afternoon in London, buoyed by general investor optimism over a weak impact from Omicron in the months ahead. The stock had started down more than 1% and remains down 31% since late September.
"'Lockdown by stealth' (government advice) ensured a difficult end to 2021 for the hospitality sector," commented Douglas Jack, an analyst at Peel Hunt.
But the future looks considerably brighter, he said.
"Less competition and a record property market are being reflected in the high multiples private equity is paying for hospitality assets," Jack said. "In stark contrast, the quoted companies are on near record-low valuations; as the end of the pandemic becomes more visible, this should be rectified, otherwise there could be a further increase in corporate activity."
By Tom Waite; thomaslwaite@alliancenews.com
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Tasty (TAST)