The UK bar operator posted an operating loss of £3.0mln for the year to June 30, compared to an operating profit of £5.5mln, due to exceptional charges of £11.1mln related to onerous lease provisions, asset impairments and the cost of management changes.
Last October, Mark McQuarter stepped down as chief executive in the wake of the company’s shareholders rejecting a takeover offer from Slug and Lettuce-owner Stonegate Capital and a merger proposal from nightclub owner Deltic Group. He has been replaced by Rob Pitcher, who took the helm six days before the year-end.
The group has seen a raft of other management changes, with the operations director leaving, the property director resigning and four out of 11 managers departing.
Beast from the East, hot summer and World Cup hit sales
Revolution also grappled with extremes in the weather with the so-called Beast from the East's heavy snowfall in late February and early March, followed by an unusually hot summer. Customers stayed away during the colder months and opted for pubs with beer gardens and venues playing the World Cup during the warmer months.
In another drag on the company’s results, Conviviality – owner of Revolution’s principal drinks supplier Matthew Clark – entered into administration in April.
Like-for-like sales edged down 0.6% for the year.
Total revenue still gained 8.7% to £141.9mln from £130.5mln last year, supported by the opening of six new sites and the annualisation of six sites opened in the prior period.
New boss plans turnaround strategy
"This is a fundamentally good business which has seen significant disruption over the past year and factors outside of its control,” said Pitcher.
“The group's strategy is sound and with a stable management team and better execution the company can rapidly return to growth. The performance of our new sites is encouraging, in line with our expectations and set to deliver good returns underpinning our strategic view of the business.”
The company maintained a final dividend of 3.3p per share.
In the first quarter of the new financial year, like-for-like sales have dropped 5% as the warm weather and World Cup continued.
However, the company said it was confident of turning around the business under Pitcher.
Pre-booked revenue for the key Christmas trading period is currently 20.3% higher than the same time last year or up 13.8% on a like-for-like basis), which the firm expects to provide a boost to results.
Numis maintained a 'buy' rating and target price of 190p, saying the weak performance was expected and that Pitcher's appointment as chief executive provided some "welcome leadership".
"Our fiscal year 2019 forecasts now assume like-for-like growth of -1% (from +2%) meaning that we downgrade FY19 EBITDA by 3.5% (helped by the Q1 weighting of new sites) and FY20 by 5.0%."
In morning trading, shares fell 1.85 to 122.75p.