Wagamama owner sees 2021 profit at top of forecast on cost-cuts

Wagamama owner sees 2021 profit at top of forecast on cost-cuts
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By Reuters
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By Muhammed Husain

-Britain's Restaurant Group forecast annual profit at the top end of its expectations on Friday as the Wagamama owner reined in costs to deal with food and drink inflation and labour market pressures.

Shares in the company were up as much 3% after it estimated adjusted core profit would come in at the top end of its projection range of 73 million pounds to 79 million pounds ($99 million-$107 million) for the year ending Jan. 2.

The group, which runs restaurants, pubs and kiosks in travel hubs, welcomed the recent lifting of curbs in Britain imposed ahead of Christmas, but cautioned that consumer confidence will take longer to recover.

Restaurant Group said sales at its Wagamama chains grew at a slower pace in December due to restrictions related to the Omicron COVID-19 variant, but that the group overall outperformed the broader market.

Other pub operators such as JD Wetherspoon and Mitchells & Butlers saw a drop in Christmas sales after the Omicron variant winter surge left venues largely empty during what should have been one of their busiest periods.

"Although the UK government has now removed most COVID-related restrictions, we expect some impact on revenues in January and a slightly hesitant recovery through Q1 (not least from air travel)," analysts at Citi said.

Restaurant Group had flagged staff shortages and supply chain constraints last year on its road to recovery from pandemic lows and warned that inflationary cost pressures would last through its fiscal 2022.

In the past year, it has restructured its Leisure and Concessions businesses, and shuttered a significant number of sites in the first half of 2021 and in 2020.

Its like-for-like December sales across its leisure, concessions and pub categories fell compared to 2019 levels. Sales at its Wagamama chains grew 1% in December, from 8% in November and 11% in October.

($1 = 0.7358 pounds)

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