TRG: Analysts bump up share price target after strong growth
Shares in Wagamama owner, The Restaurant Group (TRG), soared over 13 per cent this morning as it reported strong growth for the year so far, defying previous concerns from investors.
TRG told the market that Wagamama sales were up nine per cent in the first leg of the year and performance in its pubs and leisure business were also trading positively.
Analysts across the City welcomed the news, with Barclays upping the share’s target price and Stifel and Investec both giving the results a warm welcome.
The London-listed business, which also owns Frankie & Benny’s, also said that it was able to deliver £5m worth of cost savings initiatives, and expects to benefit from 70 per cent of the figure throughout the year.
In March, TRG revealed that it would shut 35 sites taking its portfolio from 166 restaurants down to 75-85 due to a “tough macro-environment,” which deterred customers from eating out.
However it also revealed plans to open a further eight Wagamama restaurants, as it remains to be the group’s best performing site.
The boost comes as TRG has been enthralled in a spat with activist investors at Oasis, who just last week said that they would vote down chief Andy Hornby’s “disproportionate” pay packet in its upcoming AGM.
Previously Oasis also said the chain needed an “immediate” change of governance because it had “one of the worst performing share prices of any UK leisure company”.
Andy Hornby, head of TRG, said: “Wagamama and our Brunning & Price Pubs continue to trade very strongly and it is especially pleasing to see the consistent growth in “dine in” sales with customers clearly enjoying eating out despite the economic backdrop. Our Concessions business is also performing particularly strongly as air travel continues to recover.”