Shares in Hostmore experienced a significant boost as the company announced a reduction in its pretax loss and confirmed its intentions to initiate shareholder distributions. The positive news led to shares rising by 1.2 pence, a notable increase of 8.7%, reaching a price of 15.0 pence.
During the 26-week period that ended in July, the London-listed hospitality group, which includes the popular dining brand TGI Fridays in the U.K., successfully narrowed its pretax loss to £10.8 million ($13.2 million). This is a considerable improvement compared to the previous year's loss of £17.1 million.
While the company faced challenging trading conditions across the leisure and hospitality industry, which resulted in a 5% decrease in revenue to £93.6 million, it did manage to reduce its losses at its worst-performing stores. Earnings before interest, taxes, depreciation, and amortization took a significant hit, dropping from £17.8 million to £6.6 million.
Hostmore executed an effective cost-reduction program and now expects an annualized value of £8.2 million, up from £5.9 million previously. These cost-reduction actions are projected to positively impact the company's full-year results by £5.8 million, compared to the previous estimate of £4.0 million.
In an effort to strengthen its financial position further, Hostmore has begun refinancing processes with both existing and potential new lenders. It anticipates completing these processes by the end of the first quarter of 2024.
Additionally, the company has made the strategic decision to defer new store openings until at least 2025. By doing so, it is projected to save approximately £15 million.
Hostmore's commitment to improving its financial performance and delivering value to shareholders demonstrates its resilience and determination within a challenging market.