The new broom at Restaurant Group (RTN) receives an enthusiastic welcome from the market as the last of a management team which led the company through three profit warnings in less than six months is swept away.
The shares are up 8.8% to 410p on the news the former boss of Paddy Power (now Paddy Power Betfair (PPB)) Andy McCue is to replace Danny Breithaupt (pictured) from 19 September.
Breithaupt, a 15-year veteran of RTN, only stepped up to the top job in 2014. McCue's short tenure at Paddy Power, which lasted from January 2015 until the completion of the merger with Betfair in February 2016, nonetheless saw the shares more than double as the deal moved from the speculative stage to completion. He then served as chief operating officer of the enlarged business.
Langton Capital comments: ‘Arguably the last time we saw such a wholesale clear-out at board level was post M&B’s (Mitchells & Butlers (MAB)) hedge-loss debacle back during the credit crunch. At the time, M&B’s shares had been flirting with £8 per share and they are still, some nine years later, below £3. Coincidentally, RTN’s shares also flirted with £8 and then fell to below £3.
‘The share registers of both companies are very different (which should help – or at least not arguably hinder) RTN’s rehabilitation but new capacity, high and rising rents and a reliance on leasehold assets could work in the other direction. And the company had perhaps been ‘running on fumes’ for a number of years.’