All day cafe-bar company Loungers reported a maiden set of full year results to 21 April 2019 ahead of expectations, delivering 6.9% like-for-like sales growth and total revenue growth of 26.4% to £153m. The shares were unchanged at 206p.
Loungers opened 25 new sites during the year while relocating the Occho lounge in Penrith, Wales. The company now operates from 146 sites comprised of 122 Loungers and 24 Cosey Clubs and is on target to open a further 25 sites for the full year to 21 April 2020.
The company operates two brands, Lounge and Cosy Club. Lounges are principally located in secondary suburban high streets and small town centres. The sites are characterised by informal, unique interiors with an emphasis on a warm, comfortable atmosphere, often described as a ‘home from home’.
Cosy Clubs are more formal bars/restaurants offering reservations and table service but they share similarities with Lounges in terms of their broad, all-day offering and their focus on hospitality and culture.
READ MORE ABOUT LOUNGERS HERE
Chief executive Nick Collins said the results 'represent a strong performance for the financial year ending 21 April 2019 and are in line with both our, and the market's, expectations. Our revenue and profit growth not only reflect the continued success of the roll-out, but also our unwavering focus on our customers, the evolution of our proposition and how we support and invest in our teams.
‘Our new financial year has started well and our roll-out strategy for both brands is on schedule. I remain confident about the outlook and future growth prospects for the Group.’
SELF FUNDING ROLL-OUT
Cash generated from operations was up 13.5% to £22.4m and almost covered the £23.2m cost of opening the new sites, while the company benefits from a negative working capital position as it pays its suppliers after customers pay for their food and drinks.
Broker Liberum reckons that the company will become self-funding in the current financial year. A focus on improved drinks ranges and attention to furniture styles offers an opportunity to improve the late evening like-for-like revenue growth.
Liberum and Peel Hunt expect the company to deliver circa 20% revenue growth over the next two years while improving margins as the company benefits from increasing economies of scale.
