Like-for-like (lfl) revenue in H1 2023 when adjusted for VAT was 2% down compared to H1 2022, while H2 2023 lfl revenue to 24 September was 2% up vs H2 2022.
Gross profit was £71.1m, compared to £76.1m for H1 2022. Earnings before interest, taxes, depreciation and amortization (EBITDA) was £6.6m, down from £17.8m in H1 2022.
The Fridays and 63rd+1st operator described the period as 'transitional' with the appointment of new senior leadership, implementation of operating turnaround, and introduction of revised capital allocation policy
Revenue performance was partly offset by higher average spend per head.
The warm weather in June impacted footfall due to limited outdoor space across the estate, with the group examining new initiatives to diversify its appeal beyond its core family market and during warmer weather.
Hostmore further reported its cost reductions are benefiting its2023 financial year by £5.8m, an increase from the previously announced £4.3m.
The operational and portfolio management of the bottom 20 loss-making stores has reduced losses of the last 12 months – of £4.2m – to less than £1.5m at recent annualised rate.
New store openings have been deferred until at least 2025, saving approximately £15m of cash expenditures.
It is seeing cost inflation on food, drink, and utilities stabilising, with a significant portion under long-term contracts or hedged at favourable prices.
“The initiatives taken in the first half of 2023 have built a leaner and more focused organisation,” says Julie McEwan, Hostmore's chief executive officer.
“As we move through the second half of our financial year, it is encouraging to see the effects of our strategic and operational actions coming through in our results.
“Leveraging our distinctive, trusted brand as the home of celebrations, our teams are passionate and committed about delivering an exceptional TGI Fridays guest experience.
“Notwithstanding the challenges facing the sector, the early success of our turnaround programme enables us to look to the future with confidence. The leadership team we have in place is focused on building a platform for future growth and shareholder returns, with the group well placed for the remainder of 2023 and in the years ahead.”
Hostmore is ending H1 2023 with net debt of £31.3m, an improvement from guidance of £32.2m.
It is on course to repay borrowings and commence shareholder distributions, according to the update. A refinancing process has commenced with existing and potential new lenders, and is expected to be concluded by the end of Q1 2024.
“During the period we have undertaken a very thorough review of our cost structure and store estate,” says Stephen Welker, Hostmore chairman.
“We are pleased that the actions taken have dramatically improved the financial outlook of the business, thereby keeping us on the path to repaying all of our borrowings and initiating shareholder distributions.”