Challenges in the market leave investors with a bad taste in their mouth
Companies: Tasty plc
Tasty plc is down around 14% this morning after the company released its trading update and expectations for the rest of 2017. Tasty currently has 65 establishments in and around London - 7 Dim T locations and 58 of the more recognised Wildwood restaurants.
This is not good news for the Company after their already low expectations were met with even lower figures released today, expecting to report profit before tax down 84% to just £0.2m for the 26 weeks to 2 July 2017.
In the Company's annual statements released in March the Directors communicated to shareholders that, as with other restaurant operators, they expected the trading environment to be challenging. The Directors also said they expected the first half / second half weighting of its financial performance of the Group to be similar to historic periods. This wasn't to be the case.
Looking forward, the Company is expected to:
"Dispose of certain fixed assets during the second half of the financial year to strengthen the cash resources available to the Group. The Company also expects to close certain loss making sites which may lead to impairments but improved operational cash flow."
Tasty enjoyed strong revenue growth, trebling over the five years to 2016, with operating profits following suite until 2016 when they crashed to just £0.13m, compared to £3.17m the previous year. With a market cap of £29.9m, the Company is trading at a PE multiple of 16x, a discount to the industry average of 21x. The reshuffle of assets and reviews of their estate, operational structure and cost base is expected to continue over the coming months.
