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Tue 6th Jan 2015 - Loungers reports record December trading
Loungers reports record monthly sales of more than £5m: Loungers, the Piper Private Equity backed all-day café and bar group, has reported record sales in the month of December as net sales for the calendar month exceeded £5m. The group posted a 47.8% increase in year-on-year sales to £5.12m in a period that saw like-for-like sales increase by 3.5%. It is understood that the Cosy Club brand performed particularly strongly with the group’s eight Cosy Club sites accounting for just over 30% of group sales in December. Loungers has also reported that like-for-like sales for last week (week-ending 4th January) were up 11.8% with sales on New Year’s Day significantly up by 22.7% like-for-like. Loungers’ newly appointed managing director Nick Collins said, “We once again enjoyed a really excellent festive period with good like-for-like growth and a tremendous increase in revenue. In addition to the Cosy Clubs having a stellar month, many sites set new individual sales records along the way and we saw a really strong performance across the board from the 15 sites we opened in 2014”. 

Douglas Jack issues ‘Buy’ note on Restaurant Group shares: Numis Securities leisure analyst Douglas Jack has issued a ‘Buy’ note on Restaurant Group shares. He said: “The Restaurant Group’s full year trading update is due on Friday 9 January. After 45 weeks, total sales were up 10.3%, with LFL sales up 3.0%, versus our full year forecast of 8.2% total sales and 2.5% LFL sales growth. Our forecast allows for tough trading in November and December. LFL sales rose 3.0% in Q1-3 against a backdrop of cinema attendance falling 6% and airport passenger volumes rising 4.5% during January-October. Subsequently, trading conditions were slightly tougher in November, with cinema attendance falling 7.2% and airport passenger volumes rising 3.3%. The December trading backdrop should have been a little better, with cinema box office up 4.3% during the first two weekends and many private operators indicating that Christmas trading was strong. 24 new outlets opened during the first 45 weeks. A further 16 new sites were due to open during the final seven weeks of 2014E. In addition, three new sites were scheduled to open during the first ten days of 2015E. Consequently, we recently increased our expansion forecast to 45 from 43 new restaurants for 2015E. We expect minimal change to 2014E PBT forecasts (we forecast £77.8m; consensus is £78.7m). Our forecast assumes that LFL sales rise by 2.5% and that Ebit margins fall by 15bps. The margin slippage reflects higher pre-opening costs at the end of the year (with no time to generate offsetting revenues), higher labour costs (up 3.0-3.5%) and a few concession closures during the last two months. 7% PBT growth would be a good result, in our view, for 2014E, a year in which cinema attendance is likely to fall by circa 6% to circa 9% below 2012’s level (restaurants that are co-located with cinemas generate around half of group turnover). We believe 2015E prospects are strong: aided by increasing consumer disposable income; easy cinema, weather and sports-related comps; and a strong cinema film slate (arguably better than 2012’s) to look forward to. We forecast 13% earnings growth in 2015E, based on just 2.5% LFL sales, 10bps margin growth and no change in debt despite our assumption of 45 restaurant openings. We believe there is upgrade risk to these forecasts, hence we maintain our ‘Buy’ recommendation.”

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