Revolution Bars warns on profits despite solid festive performance

In the 26 weeks to 29 December, total revenue rose 6.4% to £78.5m as the group opened five new venues. However, like-for-like sales during the period were down 4%, accelerating from a 3.2% decline in the second half of last year.

It was a brighter picture for the festive four weeks leading up to and including New Year's Eve, with LFL sales up 2.6% on the year and 8.7% higher over two years. Pre-booked party revenue rose 11.7% on a LFL basis, while average weekly sales per venue were above £60,000, with 22 venues setting new total record sales. Revolution said Christmas trading came late, with LFL sales in the last two weeks of the financial period up 8.1%.

Chief executive officer Rob Pitcher said: "The uplift in like-for-like sales performance over the festive period gives us momentum going into the second half and I'm pleased with the progress being made in refreshing the Revolution brand proposition.

"However, given the uncertain economic and political outlook we are adopting a more cautious outlook on trading in the coming months."

The group said it now expects adjusted earnings before interest, tax, depreciation and amortisation for the first half of FY19 to be around £2m lower than last year due to the drop in LFL sales and increased operating profits. Meanwhile, adjusted EBITDA for the full year is set to come in at around £12m, down from £15m the year before.

At 0910 GMT, the shares were down 18.5% to 99.31p.

Russ Mould, investment director at AJ Bell, said: "Revolution Bars has been a favourite among many retail investors for several years with individuals attracted to its upmarket proposition and that fact it was previously a takeover target for Slug and Lettuce-owner Stonegate Pub Company with a 203p per share offer in August 2017.

"Unfortunately clinging on to past ‘achievements’ would have been the wrong strategy to pursue, judging by yet another profit warning from the business.

"Falling sales and rising costs, together with a cautious outlook, has forced the company to downgrade earnings expectations, and thus the shares have slumped to an all-time low. Some investors may wonder if this renewed share price weakness will attract another bid for the company. If it does, you can bet that it won’t be at the same level as before.

"A suitor, if there is one at all, may question why the business has been struggling for several years and whether its proposition is actually right or not for the current market environment."