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Tue 1st Oct 2019 - Update: Revolution Bars Group and Greggs
Revolution Bar Group reports like-for-like sales moving in positive direction: Revolution Bars Group, the operator of 77 premium bars, trading under the Revolution and Revolución de Cuba brands, has reported like-for-like sales were down 3.5% for the 52 weeks ended 29 June 2019 but are now turning positive. The company has reported an improving trend with like-for-like sales down 4% in the First Half but down 2.9% in the Second Half and down 1.8% in Quarter Four. The company reported it made considerable progress made in 2019 – ‘a year of transition with business stabilised’. The company stated: “Five new bars were committed to open in the period (all H1); two Revolution bars trading strongly reaffirming relevance of brand, three Revolución de Cuba bars encouraging but take longer to reach maturity. Total sales rose 6.7% to £151.4 million (2018: £141.9 million) with adjusted Ebitda £11.1 million (2018: £15.0 million). There was a loss before tax of £5.6 million (2018: loss £3.6 million). At the end of the 2019 financial year, like-for-like sales growth was achieved in five of the last seven weeks and in FY20 Q1, like-for-like sales are up 0.7% and after adjusting for refurbishment closure days are up 1.2%. Six bars have already been refurbished during Quarter One including flagship Revolución de Cuba Manchester and showing encouraging sales uplifts in their first few weeks of trading. Nine further refurbishments planned in FY20. Pre-booked Christmas sales are up 15% (like-for-like 8%) on same time last year.” Chief executive Rob Pitcher, said: “A return to positive like-for-like sales in Q1 of the current year reflects the hard work by the team in stabilising the business. We will invest in our team, our brand experience and our estate to continue to improve performance. Our progress demonstrates that our business is delighting our guests, and is both profitable and cash generative. We will utilise surplus cash to reduce debt to such an extent whereby any return to expansion of the estate will be self-funding.” Chairman Keith Edelman added: “Our like-for-like sales trend has shown significant improvement over the past few months due to both the sales driving initiatives put in place gaining further traction and to the softer trading comparatives associated with the combination of 2018’s sustained period of hot weather and the FIFA World Cup. Pleasingly, these trends have strengthened further into the new financial period and like-for-like sales in the first quarter are now positive at 0.7%. Given our increased focus on the existing estate, there have been more closure days for refurbishment activity during the first quarter compared to last year, and excluding those days gives underlying first quarter like- for-like sales of +1.2%. Christmas is a crucial trading period for both our brands and we invest substantial resources into pre-selling parties. We have grown our Christmas business for six consecutive years on a like-for-like basis and we expect this year to continue that trend; early evidence is encouraging. As the many work-streams initiated during the last financial year take root, we can expect further improvements to sales trends as the year progresses. However, we are mindful of the uncertain economic and political backdrop. The board is certain that focusing management and investment on the existing estate to improve the underlying strength of the business and to use surplus cash to reduce debt remains the right strategy. We are profitable, cash generative and are focused on further reducing debt to less than one times adjusted Ebitda, at which time we expect to be able to recommence expansion on a self- funded basis. I am confident that the changes in operational personnel and the actions and work-streams initiated in the last twelve months under Rob Pitcher’s guidance will drive improved performance and a better business.”

Greggs reports 7.4% increase in like-for-like sales in most recent 13 weeks: Greggs has reported total sales were up 12.4% for the 13 weeks to 28 September 2019, boosted by a 7.4% increase in like-for-like sales at company-managed shops. Total sales for the nine months to 28 September 2019 were up 13.9% and company-managed shop like-for-like sales up 9.4%. A total of 56 net new shops opened year-to-date (90 openings less 34 closures). Its 2,000th shop opened in August and it expects around 90 net openings in 2019. Its Autumn range includes new hot sandwich options, Pumpkin Spice Latte and new post-4pm meal deals. The company stated: “Greggs continued to trade very strongly in the third quarter. As expected, the rate of year-on-year sales growth moderated as we came up against stronger comparative sales from the previous year, but sales were still up strongly, driven predominantly by growth in customer numbers. In the 13 weeks to 28 September 2019 total sales grew by 12.4% (2018: 7.3%) and like-for-like sales in company-managed shops increased by 7.4% (2018: 3.2%). Total sales have grown by 13.9% in the nine months to 28 September 2019 and like-for-like sales have increased by 9.4%. Our Autumn menu is now available in our shops, and features exciting new additions to our hot sandwich range, including Chipotle Chilli Steak and Hot Peri Peri Chicken Baguettes. Our popular Spicy Chicken and Pepperoni Bake also makes a welcome return, alongside our Pumpkin Spice Latte. We are progressing trials to open a number of shops later into the evening, supported by an extended range of great value ‘post-4pm’ deals. These include our £2 pizza plus drink offer and a new hot menu meal deal, which is made up of any hot sandwich or chicken goujons plus potato wedges and a drink for just £4. We are encouraged by customer demand for our delivery service trials, and are developing the operational processes to service this channel. In the year to 28 September 2019 we have opened 56 net new shops, opening 90 new shops and closing 34 shops, giving a total of 2,009 shops trading at 28 September 2019 (comprising 1,724 company-managed shops and 285 franchised units predominantly in transport locations). We passed the 2,000-shop landmark in August with the opening of our new shop at South Shields Interchange. For the year as a whole we expect around 90 net openings, of which around 40 are planned to be with franchise partners. We are making good progress with the construction of our new southern distribution centre at Amesbury in Wiltshire. We will be commissioning operations in the final months of this year and this will provide additional capacity to reach 250 new and existing shops, and provide scope for further future expansion of our estate in the south of England. As previously disclosed, we are preparing for the potential impact of the UK’s departure from the European Union by building stocks of key ingredients and equipment that could be affected by disruption to the flow of goods into the UK. Overall input cost inflation is in line with our previous guidance to the end of the year, with pressures on both labour and food input costs. Operational cost control has been good and we are progressing selective investments in the strategic initiatives that we expect to deliver an even stronger customer proposition and further growth in the years ahead. We continue to expect that year-on-year sales growth in the balance of the year will reflect the strengthening comparatives seen in 2018, and our expectations for the full year outturn remain unchanged.”

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