On the 17th Jan, I wrote about RTN, promising that I would announce whether or not I was right on selling my shares.
RTN issued a post close trading update today, stating:
The results are expected to be in line with previous guidance. … Recent trading continues to be challenging, with 2016 quarter four like-for-like sales down 5.9% … We expect the trading performance of the business in the first half of 2017 to remain difficult, but anticipate momentum improving towards the end of this transitional year as our initiatives start to take effect. … During 2017, the Group will also face well documented external cost pressures from the increases in the National Living Wage, the National Minimum Wage, the Apprenticeship Levy, the revaluation of business rates, higher energy taxes and increased purchasing costs due to the combined effects of a devalued pound, and commodity inflation. [Emphasis mine]
That’s quite a catalogue of negatives. The news sent the shares down 10% to 310p in early trading.
So it looks like I made a reasonable call there. I don’t dodge all the bullets, or course – if only – but every bullet dodged helps.
This should make an interesting turnaround at some point, although I do not know when. I might keep an eye on it, and see if there’s a good opportunity. The shares in RTN can be erratic sometimes, dropping a lot, but then quickly recovering. Or not.
I had thought that RTN might have posted encouraging results, and I would have been proved wrong. Some other restaurant groups seem to be doing well, so the situation was not without hope. It did not pan out that way, though.
Stay safe out there.
Update 25-Jan-2017: I would like to point out what I think is an important additional lesson. A lot of investors espouse the virtues of patience. That’s fine, but there’s also a flip-side to this: it tends to make you procrastinate, than act. I have found that I have made some good calls under pressure. Sometimes you just need to act.