MARKET REPORT: TGI Fridays proprietor on the brink as inventory falls 90%

Shares in the hospitality company behind TGI Fridays in the UK plummeted as it teeters on the brink of collapse.

In a spectacularly bleak update to the stock market, Hostmore dropped a series of bombshells that left investors facing total wipeout.

The business, which has 87 restaurants in the UK, said sales so far this year are 12 per cent lower than the same period last year.

Hostmore blamed ‘persistent warmer weather than the comparative period in 2023 and underlying weak consumer spending’.

In a spectacularly bleak update to the stock market, TGI Fridays-owner Hostmore dropped a series of bombshells that left investors facing total wipeout.

The firm also said it has abandoned plans to buy TGI Fridays in the United States, where there are 128 sites, in a deal that would have been worth £177million.

And it warned that the sale of its UK restaurants – part of a plan to become a larger fully franchise-operated business with restaurants on both sides of the Atlantic – will not ‘recover any meaningful value’.

Hostmore said it will instead be ‘wound up and delisted’ from the stock market in London when the sale is completed this month.

TGI Fridays will continue to operate under new ownership, it added. Hostmore shares, which were changing hands for as much as 156p on their first day of trading in November 2021, crashed 90.8 per cent, or 8.63p, to 0.87p.

Russ Mould, investment director at broker AJ Bell, said it is ‘effectively game over for Hostmore as a listed business’. He described it as ‘an awful start to the week’ for the company. 

By contrast, Mould hailed ‘a strong start’ for the wider London market as the FTSE 100 looked to put six consecutive days of losses behind it with a rise of 1.1 per cent, or 89.37 points, to 8270.84. The FTSE 250 gained 0.8 per cent, or 156.88 points, to 20650.88.

Stock Watch – Synectics

Security firm Synectics has won a further contract worth £2.4million related to the upgrade and expansion of the surveillance system at a major gaming resort in South-East Asia.

The deal is in addition to a £7.6million contract announced in June. 

AIM-listed Synectics said the unnamed customer has been using its software platform Synergy since 2014 and the contracts will upgrade the existing systems. 

Shares added 4.8 per cent, or 9p, to 195p.

The rally came as investors await crucial economic data – on jobs and wages today and gross domestic product tomorrow – as they hunt for clues on the outlook for interest rates.

The Bank of England cut rates from 5.25 per cent to 5 per cent last month and while it is expected to leave them there when it meets next week, two further cuts are seen as likely by the end of the year.

Of perhaps even greater importance, certainly to global markets, is what the US Federal Reserve decides to do next week.

An interest rate cut is widely expected, but it is unknown whether the Fed will opt to reduce benchmark US borrowing costs by 0.25 percentage points or 0.5.

Back in London, shares in computer services firm Computacenter came under pressure after it reported a slide in revenues and profits. 

The company said sales dropped 11.6 per cent in the first half of the year to £3.1billion while profits tumbled 31.6 per cent to £84million. 

Chief executive Mike Norris flagged ‘an encouraging start to our third quarter’ and added that the company expects ‘stronger momentum in the second half’ of the year. But shares fell 6.9 per cent, or 178p, to 2410p.

Magners cider maker C&C Group said trading in the six months to the end of August – the first half of its financial year – was ‘in line with expectations’ with revenues down 3 per cent. 

C&C also launched a share buyback worth €15million. Shares in London rose 1.1 per cent, or 1.6p, to 152.6p.