Market Report: The Restaurant Group sours on warning

Investors in The Restaurant Group who cut their losses following heavy falls from the Garfunkel’s owner this year breathed a sigh of relief today after dodging another profit warning.

The FTSE 250 firm, which also owns Frankie & Benny’s, revealed that pre-tax profits for this year are now expected to be between £74 million and £80 million, lower than the £87 million it banked last year, as it struggles to get customers through its doors.

The company, which is heading for its first fall in annual profits for more than six years, expects like-for-like sales to fall between 2.5% and 5% this year, blaming Frankie & Benny’s and Chiquito, based at retail parks, rather than Garfunkel’s for its troubles.

“Although the pubs and concession businesses are performing well, the restaurants in retail parks are underperforming because of lower footfall, increased competition and cannibalisation,” Panmure Gordon analyst Anna Barnfather said.

Those who had remained loyal to the cause after two big share dives already this year decided enough was enough, sending the shares plunging further, down 80.16p or 21% to 294.14p.

Investors weren’t the only ones heading for the exit — finance chief Stephen Critoph has left, a few months after the company revealed chairman Alan Jackson was on the way out.

With corporate results hardly filling investors with confidence, it came as little surprise that the FTSE 100 drifted 49.49 points lower to 6272.91, after a late sell-off on Wall Street.

AstraZeneca reversed early falls, caused by a first-quarter profit slide, to stand 12.5p healthier at 3972p when chief executive Pascal Soriot confirmed plans to cut jobs in a bid to prevent the drugmaker’s profits falling further.

Ophir Energy dived 15.6p to 76.3p as Schlumberger walked away from its floating liquefied natural gas project off Equatorial Guinea, leaving the mid-cap oiler in need of a new funding partner.

Buyers flocked to Rotork, up 10.7p at 190.1p, after it announced its $25 million (£17 million) takeover of US-based gearbox maker Mastergear and as it managed to nudge first- quarter revenues higher despite fewer valve orders from oil and gas firms.