The Restaurant Group reports tougher trading: The Restaurant Group has reported total turnover was up 7.9% on the prior year for the 52 weeks ended 27 December, and like-for-like sales increased by 1.5% with tougher trading at the end of the year. The group’s full year results are expected to show material growth in both earnings and cash flow versus the prior year, with profits for the full year towards the middle of the current range of market expectations. The company stated: “During 2015 we opened a total of 44 new restaurants. We are very pleased with how these are trading and they are set to deliver strong returns. We have good visibility on the composition of the opening programme and we anticipate opening a broadly similar number of new restaurants during 2016. It has become apparent from much of the recent data from the retail sector and the wider economy that the trading environment for many consumer facing businesses has been tougher in recent months than it was earlier in 2015. This has caused like-for-like sales growth to trend lower and accordingly we are more cautious than previously on the outlook for 2016. A possible referendum on the UK’s continued membership of the European Union, National Living Wage implementation and global uncertainty are all additional issues that we are conscious of going into the new year. That said TRG has an excellent portfolio of businesses with strong market positions. The company’s move towards a more balanced portfolio is paying dividends and we have a proven track record established over many years of delivering strong financial returns and excellent cash flows, even through more difficult trading periods. Therefore, notwithstanding some of the uncertainties described above, we are confident that TRG is well positioned to deliver further profitable progress in 2016 and subsequent years.” Douglas Jack, leisure analyst at Numis Securities, cut his 2016 forecast by 1% but issued a ‘Buy’ note with a 775p target price. He said: “Like-for-like sales rose by 1.5% in 2015E, versus 0.8% (Jan-Nov 2015) for the restaurant component of the Coffer Peach Business Tracker, following a flat Quarter Four. Spectre benefited trading in Quarter Three (to 8 Nov), and we believe Star Wars boosted trading between Christmas and New Year, but this week falls into 2016E. With the average number of units growing by an estimated 5.5% (the programme was Q4-weighted), we estimate that new units generated average sales of £30k per week, 10% above the estate average. Given the PBT and debt reduction guidance, we are upgrading 2015E PBT slightly, by now anticipating £127m of Ebitda and £88.4m of Ebit, implying a 40bps Ebit margin increase in H2 (when like-for-like sales were 0.5%), up from 10bps in H1 (when like-for-like sales were 2.5%). This reflects efficiencies and lower food costs. 44 restaurants opened in 2015E and we forecast the same number opening in 2016E. Given 2015E’s debt reduction and our estimate that the company’s pre-tax and centrals CROIC is 44%, current expansion plans point to another reduction in net debt. We are cutting our 2016E PBT forecast by 1% (from £94.6m to £93.5m; consensus £96.3m) by assuming 7.5% expansion (37 net openings, after sites coming to the end of their leases), 1.0% like-for-like sales and almost 20bps margin decline. We expect energy costs should be lower, food costs should flatten and labour costs should pick up (already in budgets/forecasts); and assume no boost from rising consumer spending power. There are clear signs that market supply growth has slowed sharply in H2 2015, with private operators pulling back on expansion. With just 0.2x net debt/Ebitda and growing returns on investment, we believe RTN’s earnings growth should remain strong. We would use any weakness as a buying opportunity.”

Tesco reports “strong Christmas”: Tesco has reported UK like-for-like sales rose 1.3% in the six weeks to 9 January 2016, an improvement on the 1.5% decline seen in the 13 weeks to 28 November 2015. Chief executive Dave Lewis said: “Our Christmas performance was strong, benefiting from lower prices on an outstanding range of products. Our customer service improved materially and our colleagues went the extra mile. Put simply, we put customers at the heart of everything we did and they responded by buying more of what they needed at Tesco. International sales have also continued to strengthen, driven once again by improvements across the offer. We continued our strong positive sales momentum in both Europe and Asia, with our Thai business reaching its highest ever market share. We are continuing to focus our efforts on serving our customers a little better every day and I want to thank my colleagues across the group for their commitment, passion and energy. There is plenty more to do, but we are making good progress and are trading in line with profit expectations for the full year.” The company added: “For the six-week Christmas period, like-for-like sales in the UK grew by 1.3% - a significant improvement on recent results. Volumes increased by 3.5% and transactions increased by 3.4% as more customers chose to do more of their Christmas shopping at Tesco. In addition to the continuous improvements we have been making over the course of the last year, customers also responded well to a stronger seasonal offering. In the peak festive week, we introduced 4,000 additional ‘Here to Help’ colleagues to stores to give customers an extra helping hand. Through our ongoing investment in lower, more stable prices, we were around five per cent cheaper than last year on the lines that mattered most to our customers at Christmas. ‘Brand Guarantee’ also played an important role by reassuring customers that if their branded shop could be found more cheaply elsewhere, we would take the money immediately off their bill. Our strong Christmas performance was evident in all formats and categories, including positive like-for-like sales growth in our Extra format, where customers responded well to our seasonal general merchandise ranges. In clothing, sales grew significantly ahead of the market, with strong ladies fashion and knitwear ranges supported by an attractive Christmas gifting offer. Customers also benefited at Christmas from the full range of services that we offer. Demand for our grocery home shopping service resulted in a record number of orders delivered in one day on 22 December and over 20,000 customers activated a Tesco Mobile pay-as-you-go mobile handset on Christmas day alone. With over 4.5 million customers in the UK, Tesco Mobile is now the largest UK MVNO and has retained its position as the number one network for customer satisfaction. Following the completion of six further category range resets in the third quarter including dairy, produce, wines & spirits and impulse, availability reached new record highs. Colleagues across our entire store and distribution network delivered the smoothest operational performance in many years, supported by the changes we have made to simplify our processes and systems.”

Booker Group reports sales up 10.5%: Group sales, at Booker Group including Budgens and Londis, rose by 10.5% in the 16 weeks to 1 January 2016compared to the same period last year. Booker Wholesale with Makro, its cash and carry division, had a good quarter for customer numbers, customer satisfaction and cash profit. Non tobacco sales reduced by 1.3% on a like-for-like basis. They were impacted by deflation in food prices and many customers reporting weak consumer demand during the period. Tobacco sales continued to be adversely impacted by the ban on small stores displaying tobacco products, down 6.9% like-for-like. The company added: “Booker Direct, Chef Direct and Ritter performed as we expected. We made good progress on the integration of Londis and Budgens, which joined the Group on 14 September 2015. Sales in India continued to make progress from our six branches. The outlook for profits and net cash remains in line with the guidance given at the Interim Results.” Chief executive Charles Wilson said: “Booker Group continued to make progress in a challenging market. Our plans to Focus, Drive and Broaden remain on track. Budgens and Londis are settling into the Group well as we continue to improve choice, prices and service for all our customers.”