Christmas came too late for Revolution Bars Group PLC (LON:RBG), which has warned investors that this year’s profits will be around 20% below what it achieved in 2018.
In line with what other retailers and pubs have said recently, Revolution, which runs 79 bars up and down the UK, saw a jump in takings in the final weeks of December, much later than when the Christmas boost normally arrives.
READ: Revolution sales dented by Beast from the East, hot weather and World Cup
That late uptick helped to spare Revolution’s blushes and push same-bar sales up by 2.6% last month, up to and including New Year’s Eve.
Still, it wasn’t enough to gloss over what was a subdued few months – an important period for the company in which it can generate more than half of its annual profits.
Like-for-like sales in the first half of its financial year – the six months to 29 December – were down 4.0% as the sluggish first-quarter performance continued into October and November.
Weaker outlook
As a result of that, and the continued uncertain outlook, Revolution expects adjusted underlying earnings (EBITDA) to be around £12mln in 2019 – some £3mln less than what it generated last year.
“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,” said chief executive Rob Pitcher.
“However, given the uncertain economic and political outlook we are adopting a more cautious outlook on trading in the coming months.”
Broker slashes forecasts
“Although LFL sales were up 8.1% during the last two weeks of H1 (to 29 December), they were down 4.0% in H1,” said Peel Hunt in a note to clients.
“Despite new openings trading well (we estimate average sales were down 2%), the fall in LFL sales caused H1 EBITDA to fall by £2m. We are cutting our full-year profit before tax forecast by half [to £4.1mln].”
The analysts added that management needs to get to grips with Revolution’s food offering as previous initiatives “have not worked so well”.
Revolution shares dropped 18% at the opening bell to 100p.