SSP Sales Drop Due to Omicron Restrictions

Travel food and beverages specialist SSP Group plc (LON: SSPG) sales were held back by Omicron in the first four months of its business.

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The company, which operates brands such as Upper Crust and Ritazza, said group revenue was 62% of 2019 levels for the period ended January 30, 2022. Sales representing 71% and 62% of 2019 figures were seen in the Rail and Air sectors, respectively, for the first nine weeks of the new financial year. However, Omicron dampened sales in 2022.

SSP said that the spread of the Omicron variant globally and subsequent government restrictions have inevitably impacted passenger numbers in many of its markets, leaving the group’s overall sales over the past eight weeks (from December 6 as of January 30) to approximately 57% of 2019 levels.

Sales Now Positively Trending

Trading remained resilient in December and throughout the Christmas period but softened in early January. However, SSP added that the past few weeks have been more encouraging as government restrictions in the UK and parts of mainland Europe have been lifted.

Sales are now on a positive trend, driven by stronger trade in the rail sector as commuter travel returns.

SSP said it is actively managing unit openings and closings in response to fluctuating demand, with around 1,950 units currently open, or around 72% of its estate.

Outlook

The company’s medium-term expectations, which call for a return to comparable revenues and EBITDA margins to broadly similar levels to 2019 by 2024, remain unchanged.

Wall Street’s Take

On January 31, Deutsche Bank analyst Andre Juillard launched coverage of SSPG with a Buy rating and 333p price target. This implies 26% upside potential.

Juillard stated that the company should benefit from the UK and Europe “playing catch up to the recovery.”

SSPG stock comes in as a Strong Buy consensus rating based on nine Buys.

The average SSP Group price target of 339.75p implies 28.6% potential from current levels.

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