Hostmore narrows losses but shares dip after turnaround year

Hostmore reports narrowed annual loss but share price sinks.

Hostmore (LSE: MORE), the owner of TGI Fridays, reported a narrowed annual loss for 2023. The company’s share price fell 9% to 19.00 pence on Friday following the announcement.

Revenue in 2023 dipped slightly to £190.7 million from £195.7 million a year earlier. However, the company’s pre-tax loss narrowed significantly to £25.5 million from £108.3 million.

The improvement was driven by a series of cost-cutting measures, including delaying new store openings and improving operations at existing locations.

The company also implemented a new capital allocation policy focused on reinvesting profits in existing stores and prioritising debt repayment before shareholder distributions.

Looking ahead, Hostmore reported a 7% year-on-year decline in revenue for the first quarter of 2024, citing reduced consumer demand across the casual dining sector.

The company also announced plans to merge with its franchisor, TGI Fridays Inc., in a deal valuing the combined company at £177 million. Hostmore shareholders will hold a 36% stake in the new entity, with the remaining shares controlled by TGI Fridays’ current owners, TriArtisan Capital Advisors and MFP Partners.

Completion of the merger is subject to regulatory approval and is expected in the third quarter of 2024. Hostmore’s chairman, Stephen Welker, believes the deal will “give the group increased scale, flexibility and re-rating potential” to accelerate debt reduction and improve shareholder returns.

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