Revolution Bars Group PLC (AIM:RBG) dropped close to 22% after it lowered profit guidance due to weaker trading and additional headwinds expected in the second half of the financial year.
Underlying earnings for the full year are expected to be between £3 million and £3.5 million, the group said in its trading update for the first half to 30 December 2023.
January trade started softly for the London-listed group and even though the national minimum wage is increasing in April, management isn’t confident it will lead to increased spending by its guests.
However, the rise in wages will affect the group’s wage costs, while continued rail strikes and the uptick in business rates are also believed to pose as headwinds.
Planned refurbishments at venues have been put on hold until trading improves.
Rob Pitcher, CEO at the hospitality group, said: “Revolution's younger guests are however still feeling the disproportionate effect of the cost-of-living crisis.
“We have had to take the view that, with inflation remaining high, the recovery for the Revolution business, our largest brand, will take longer than we had previously forecast.”
Sales during the festive period lifted 9% to rank as the best Christmas since the pandemic, although revenues throughout the first half were down 2.8% year-on-year.
Wednesday’s share price drop means Revolution Bars has lost around half of its market value in 2024, with shares currently trading at 3.2p.