Shares in XP Factory PLC (AIM:XPF) sank 17% to 11.65p chopped off after the competitive entertainment chain issued a profit warning, blaming weaker trading at its Boom Battle Bar chain despite record overall group sales over Christmas.
Revenue from UK sites the company owns and runs rose 4.2% in the 13 weeks to 28 December.
For the first 39 weeks of the financial year, underlying profits (EBITDA) came in at £4.8 million, down £0.1 million versus the prior year.
Like-for-like sales at Boom fell 7.2% over the same period, despite strong corporate bookings, which failed to make up for lower consumer spending.
Boom’s site-level profit margins came in at around 18%. Costs also rose, with increases to the National Living Wage and National Insurance adding around £1.5 million to the wage bill.
Escape Hunt, the group’s escape room brand, performed more strongly. Sales from owned sites rose 10%, helped by new locations in Canterbury and Sheffield. LFL sales were up 6.4%, with margins of about 43%.
XP now expects profit for the year, before lease accounting adjustments, to come in at between £5 million and £6 million, which is below market forecasts.
Chief executive Richard Harpham said: “While near-term trading within Boom has been impacted by market pressures, we remain well positioned to emerge as a long-term winner.”
Due to slower LFL growth and cost inflation, the board has decided it would be prudent to slow the pace of new site openings in the near term, meaning the new financial year is "expected to be a year of consolidation, with remaining uncertainty driven by market conditions".