MARKET REPORT: TGI Fridays owner Hostmore on the brink as shares plunge 90%

Shares in the British hospitality company behind TGI Fridays have fallen dramatically, leaving the company teetering on the brink of collapse.

In a spectacularly bleak stock market update, Hostmore delivered a series of shocking reports that completely floored investors.

The company, which has 87 restaurants in the UK, said sales so far this year are down 12 percent compared to the same period last year.

Hostmore blamed the decline on “continued warmer weather than the comparable period in 2023 and underlying weak consumer spending.”

The company also said it had dropped plans to buy TGI Fridays in the United States, which has 128 stores, in a deal reportedly worth £177 million.

And the company warned that the sale of its UK restaurants – part of a plan to become a larger, fully franchised business with restaurants on both sides of the Atlantic – “will not deliver meaningful value”.

Hostmore said the company will instead be “liquidated and delisted from the London stock exchange” when the sale completes this month.

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

Russ Mould, investment director at broker AJ Bell, said it was “effectively game over for Hostmore as a listed company”, describing it as “a terrible start to the week” for the company.

Mould, on the other hand, praised “a strong start” for the broader London market as the FTSE 100 looked to snap six straight days of losses, rising 1.1 percent, or 89.37 points, to 8,270.84. The FTSE 250 rose 0.8 percent, or 156.88 points, to 20,650.88.

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

The Bank of England cut interest rates last month from 5.25 percent to 5 percent. Rates are expected to remain at that level at next week’s meeting, but two more cuts are likely before the end of the year.

Perhaps even more important, especially for global markets, is what the US Federal Reserve decides to do next week.

Interest rates are widely expected to be cut, but it is not yet known whether the Fed will cut US borrowing costs by 0.25 percentage points or 0.5 percentage points.

In London, shares in computer services provider Computacenter came under pressure after the company reported a drop in revenue and profit.

The company said revenue fell 11.6 percent to £3.1 billion in the first half of the year, while profits fell 31.6 percent to £84 million.

Chief executive Mike Norris said “our third quarter has got off to an encouraging start” and added the company expects “stronger momentum in the second half” of the year. But shares fell 6.9 percent, or 178p, to 2,410p.

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 sales down 3 percent.

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