SSP confident recovery on track despite Omicron hit in January

Travel food outlet operator SSP Group said trading in January softened due to the Covid Omicron variant but was confident its recovery remained on track.

The Upper Crust owner said recent weeks had been “more encouraging”, as curbs were lifted in the UK and some Continental European markets, with sales now trending positively again, driven mainly by strengthening trading in the Rail sector as commuter travel returns.

In the four months from October 1, group revenues hit 62% of pre-pandemic levels with trading “resilient” during December and the holiday period before softening in January where trading in the last eight weeks fell to 57%. In the preceding nine weeks it had reached 66%.

The company, which also owns the Ritazza cafe chain, said underlying core earnings were positive and net cash flow was broadly neutral during the first quarter of the fiscal year to September 30.

SSP also reiterated medium-term guidance of a return to 2019 core earnings margins by 2024.

“Whilst the Omicron variant continues to have some impact on trading, we are confident in our ability to manage any short-term volatility and, subject to no further government restrictions being introduced, we are well positioned for the important summer trading period,” the company said on Friday.

Analysts at Shore Capital said they had "conservatively" left full year revenue expectations of £1.9bn unchanged and found the company's update "encouraging" on its path to recovery.

"At this stage, we leave our 2022 estimates unchanged (EBITDA of £65m), although we see cautious optimism heading into the second half. Longer-term, we continue to see like-for-like revenues returning to pre-Covid levels by 2024F, consistent with management assumptions," the wrote, while also rating the shares a 'buy'.