- Firm closes eight bars to stem future losses
- Macro headwinds and increase in national living wage bite
- Best festive trading in four years
Shares in premium bars and gastro pubs operator Revolution Bars (RBG:AIM) crashed 22% to 4.2p after the company said it is closing eight of its least profitable bars to reduce future site losses.
Investors peered past positive festive trading and focused instead on the ‘challenging’ macroeconomic environment and the prospect of the statutory 10.8% increase in the national living wage from April this year.
Over the last year, shares in Revolution Bars have lost 43% of their value and are 94% below the levels they were trading at before the pandemic.
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On a brighter note, the company said sales were up 9% on a like-for-like basis between 4 December and 30 December, which is the best performance in four years.
This shouldn’t come as too much of a surprise to investors following comments made by management in October that pre-booked festive bookings were at record highs.
Group like-for-like sales for the first half to the end of the year including New Year’s Eve continued their improving trend but remained negative at 2.8% compared with negative 5.5% in the four months of the fiscal year.
WHAT DID THE COMPANY SAY?
CEO Rob Pitcher commented: ‘We have had the best festive trading period for four years with all of our brands recording positive like-for-like sales and Revolución de Cuba being the standout performer.
‘However, our younger customers are still feeling the disproportionate effect of the cost-of-living crisis and the national living wage will increase materially in April 2024.
‘Therefore, we have taken the difficult yet ultimately beneficial step for the group to close several bars which are unprofitable.’
Revolution Bars said negotiations for five of the eight closing bars has already begun for them to be transferred to other operators and the lease obligations rescinded.
Employees impacted by the closures are expected to be redeployed elsewhere in the group. Net debt as of 4 January was £18.3 million which is lower than the £21.6 million reported in July.
