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Wagamama-owner sees encouraging sales as lockdowns loom

·1-min read
Wagamama restaurant in London
Wagamama restaurant in London

(Reuters) - Wagamama owner Restaurant Group <RTN.L> unveiled improved like-for-like sales numbers for the period since the start of July on Tuesday, while withdrawing its financial guidance and warning about the impact of renewed coronavirus restrictions in the UK.

The company, which operates over 350 restaurants and pubs across the UK, posted an adjusted pretax loss of 47.5 million pounds, for the six months ended June 28, compared to a profit of 28.1 million pounds a year earlier.

The group also laid out a total of 180 poorer performing sites it has exited as a result of placing the Chiquito and Food and Fuel operations into administration and dramatic downsizing of Frankie and Benny's chain.

It said its performance in the eleven weeks to Sept. 4, which included the government's eat out to help out scheme, was encouraging, with Wagamama like-for-like sales up 11%.

Shares rose 9% to 59.75 pence in early trade.

"(The update) reads better than some would have feared," said analysts from Winterflood said in a morning note.

"They will benefit from competition reducing as (there has been a) circa 30% capacity reduction .... as a result of COVID-19."

Restaurant Brands said that while outlook for the sector remained extremely challenging, the company was well-positioned with sector capacity reducing and a freshly restructured business.

The UK government has imposed fresh restrictions in recent weeks to combat a second wave of the coronavirus, including shutting restaurants and pubs early. Restaurant owners, already reeling from the pandemic, will face a further blow if stronger lockdowns are announced.

(Reporting by Shanima A and Tanishaa Nadkar in Bengaluru; Editing by Patrick Graham)