Cosy Club owner Loungers PLC (AIM:LGRS) offered up optimistic comments on inflation and the UK economy this morning, as the firm said full-year profit would beat expectations.
“Our experience suggests that the UK economy is holding up well,” boss Nick Collins said, with the company also highlighting “easing inflationary pressures”.
Such comments are likely to spell positive news for rivals such as Stonegate, which owns Slug and Lettuce, and Revolution Bars.
That said, analysts noted Loungers appeared to be in a strong position against rivals, with the Cosy Club owner hailing its expansion plans while the two rivals appear to struggle with debt refinancing and turnaround plans respectively.
“We estimated that Loungers was one of few operators to have improved volumes post-pandemic,” Liberum said following the update.
“Like most operators, like-for-like growth since last year has been mostly price-driven, however, volumes have remained robust and hence it retains headroom to move prices up again.”
Stifel added Loungers’ “broad demographic appeal” aided with this, alongside its “all-day trading proposition and neighbourhood locations”.
These “play well to evolving consumer behaviours,” Stifel added, with the sector having faced pressure in recent years as higher costs have hit consumers.
Indeed, “We believe that Loungers’ enduring appeal is due to its consistent all-day offering of quality food and beverages at a competitive price point, with menu innovation introducing new and fashionable cuisines alongside the classics,” Liberum said.
Both put ‘buy’ ratings on Loungers as a result, with Liberum noting Loungers had outperformed the sector over the last six months, despite a wider slowdown in sales after Christmas.