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Wed 12th Apr 2017 - Update: Coffer Peach March results, Comptoir Group and Tesco results
Late Easter dampens March sales for restaurant and pub operators: Britain’s restaurant and pub groups saw collective like-for-like sales fall back 0.5% in March, according to latest figures from the Coffer Peach Business Tracker – with the late Easter holiday break being the chief culprit. Restaurant chains recorded collective like-for-like sales down 1.4% in March, with trading in managed pubs flat compared with the same month last year. “Easter can usually be relied on to provide a significant boost to the eating and drinking out market, but with it falling in April this year, a month later than last time, it has skewed March trading figures. But with only a 0.5% decrease overall, operators will be hoping for an extra uplift when April numbers appear,” said Peter Martin, vice president of CGA Peach, the business insight consultancy that produces the Tracker, in partnership with Coffer Group and RSM. “With or without Easter, London saw strong trading during the month, with a 2.9% like-for-like increase across the market, driven in particular by robust sales in pubs and bars. The capital showed no immediate or obvious reaction to the Westminster terror attack either. However, outside the M25 like-for-likes dropped 1.7% in March. With growing cost pressures on the sector from business rates, food price inflation and wage increases, the fact that consumer spending on out-of-home food and drink appears at least to be holding up will be some relief for operators,” Martin added. The March numbers follow a 1.7% like-for-like market increase in February, a 1.9% rise in January and 2.2% growth over the Christmas and New Year period. However, the underlying annual sales trend shows sector like-for-likes running at just 0.8% ahead for the 12 months to the end of March. Total sales growth in March among the 34 companies in the Tracker cohort was up 2.1%, reflecting the continuing impact of new openings over the year. Trevor Watson, executive director at Davis Coffer Lyons, said: “The strength of the London market shows that the capital is much more resistant to terror attacks, in commercial terms, than in previous years. Consumer spending in the UK remains firm, with London benefitting most from the weaker exchange rate which is under-pinning overseas visitor and staycation spending. The slight dip in sales at the national level should be recovered in April with the benefit of the late Easter. For operators, Easter is now a close second to Christmas as a benchmark period,” said Paul Newman, head of leisure and hospitality at RSM. “An early Easter last year makes these figures tricky to assess although a 0.5% like-for-like decrease will be seen positively by many. This is especially good news when compared to the larger fall in overall retail sales for the same period. The trend towards experiences continues, with consumers increasing spend on eating and drinking-out over ownership of shop-bought products.”

Comptoir Group reports results, reduces openings planned for 2018: Comptoir Group has reported group revenue increased 21% to £21.5m (2015 – £17.7m) for the year ended 31 December 2016. It announced that openings in 2018 would be reduced to four. Gross profit increased 21% to £15.7m (2015 – £13.0m). Adjusted Ebitda was up 7% to £2.7m (2015 – £2.5m). Adjusted pre-tax profit was 4% lower at £1.6m (2015 – £1.6m). There was a IFRS loss before tax of £1.0m (2016 – £1.3m profit). Six new restaurants were opened and three acquired and the company had 22 restaurants trading as at 31 December 2016. Adjusted Ebitda is calculated excluding the impact of £1.2m (2015 – Nil) non-trading costs and £1.4m opening costs Chairman’s Richard Kleiner said: “I am pleased to present the group’s results for the year ended 31 December 2016, being our first set of full-year results since successfully listing on AIM. I am also pleased to report considerable progress with our strategy to grow our operations and extend the presence of our brands to new locations both in and outside of London. Group revenue increased by £3.8m or 21% from £17.7m to £21.5m and adjusted Ebitda was 7% higher at £2.7m (2015 – £2.5m). Given that we opened six new restaurants in the period, off a base of only 13 restaurants, the one-off costs incurred in connection with these openings rose sharply to £1.4m (2015 £0.3m), with a commensurate impact on reported profits. For this reason, we add back these opening costs in calculating adjusted Ebitda, as the board believes this gives the most useful measure of the underlying performance of the business. After the inclusion restaurant opening costs and £1.2m non-trading items, which comprises £0.5m (2015 – Nil) on impairment of property, plant and equipment, £0.5m share option charge (2015 – Nil) and £0.2m (2015 – Nil) of AIM listing fees, the Income Statement shows a pre-tax loss of £1.0m (2015 – £1.3m profit). The board does not recommend the payment of any dividend at this time, as it is anticipated that all available funds will be required for investment in new restaurants or the existing estate for the foreseeable future. The group has delivered on its plan to step up its rate of expansion in the second half of the year, following the successful IPO, increasing the number of restaurants trading from 14 to 22 at the close of the year. We have invested £7.5m in the fit-out of these new openings, the acquisition of Yalla Yalla and the purchase of the freehold of our Central Processing Unit (CPU). Taken together with one further additional opening in London in January, this has been funded by the proceeds of our AIM flotation and at the end of the year we had retained cash and cash equivalents of £0.8m (2015 – £0.7m). The friendliness, dedication and passion of our people is at the heart of our success as a business. The busy opening programme that we embarked on over the second half of 2016 has presented new challenges for our management team, who have risen to the task magnificently. I would like to thank them particularly and also our new recruits who are delivering our delicious food with great service and enthusiasm in our new restaurants, for all their efforts. The group ended the year with 22 restaurants and two franchise operations, ahead of expectations and is currently trading from 23 restaurants. Due to the group’s opening programme being ahead of the schedule anticipated at the time of IPO, the group expects to only open a further three restaurants during the current year. 2017 will therefore be focused on bedding in new openings, promoting the Comptoir brand to consumers in new locations and delivering on anticipated returns. During the first quarter of 2017 we have experienced the UK consumer being cautious. Trading in January and February, traditionally the Company’s quietest months, was below expectations, however, we saw improved trading in March. The group expects further positive trading in April (which includes Easter) and into the summer months. The board has made the decision to reduce its opening schedule for 2018 to four restaurants in 2018 (four in 2017), which will impact the financial performance in 2018. The board will increase the numbers of openings ahead of this revised 2018 target if suitably attractive locations become available and dependent on market conditions.”

Tesco reports further progress as margins increase: Tesco has reported group sales up 4.3% to £49.9bn in its 2016 to 2017 financial year. UK like-for-like sales were up 0.9% – its first reported full-year growth since 2009/10; UK food like-for-likes were up 1.3%. group operating profit before exceptional items was up 30% to £1,280m; UK and ROI up 60% to £803m. There was a step up in group operating margin from 1.8% to 2.3% it is on track for 3.5-4.0% by 2019/20. The company reported further improvement in its core offer, including circa £300m investment in seven exclusive fresh food brands in March 2016, contributing to sustained market outperformance in fresh food. Price of typical basket down 6% since September 2014; promotional participation down to 32%. It reported it is the most improved food retailer for quality perception; record rating for staff helpfulness at 80%. It said availability at record high; simpler range with 24% net reduction over two years. Cost savings of £226m have already been achieved towards £1.5bn medium-term target; FY savings of £455m. Chief executive Dave Lewis said: “Today, our prices are lower, our range is simpler and our service and availability have never been better. Our exclusive fresh food brands have strengthened our value proposition and our food quality perception is at its highest level for five years. At the same time, we have increased profits, generated more cash and significantly reduced debt. We are ahead of where we expected to be at this stage, having made good progress on all six of the strategic drivers we shared in October. We are confident that we can build on this strong performance in the year ahead, making further progress towards our medium-term ambitions. On top of this, our proposed merger with Booker will bring together two complementary businesses, driving additional value for shareholders by realising substantial synergies and enabling us to access the faster growing ‘out of home’ food market.”

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