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Thu 14th Jun 2018 - Revolution reports sales short of expectations after volatile trading
Revolution reports ‘challenging and volatile’ trading, sales short of expectations: Revolution Bars Group has provided an update on the performance of the group for the 52 week period ending 30 June 2018, reporting it has experienced ‘challenging and volatile trading conditions and sales have fallen short of expectations’. Consequently, full year underlying profit performance, measured by Adjusted Ebitda (excluding pre-opening costs), is anticipated to be in line with last year’s result (£15.1m).The adverse, wintery weather conditions in March combined with the unusually hot weather throughout May and early June, has curtailed typical late-night week-end trading. The sales performance in the last six weeks at sites with significant outside trading areas has performed well relative to last year. Total sales for the group in the second half to 9 June 2018 are up by 7.3%, however, like-for-like sales are down 1.7%. The company stated: “Both of our brands have seen similar changes in their sales trends over this period, although Revolucion de Cuba like-for-like sales remain in growth. For the 49 weeks to 9 June 2018, total sales are up by 9.1% and like-for-like sales are down by 0.5%. Wet sales have performed better than food, particularly in the Revolution estate where little food development and innovation was undertaken in 2017. This development is now underway for delivery in Q1 next year. Whilst the board believes that the weather has been the most significant factor impacting the sales trend, disruption caused by operational management change prompted by the unsettling effect of last year’s takeover activity and the prolonged absence of a chief executive officer has also played its part. The board remains confident in the future prospects of the business given the following initiatives: The new bars opening programme for the current financial year has been delivered to schedule. Those five bars are performing to expectations; as planned, we have six new sites for our next financial year including four large bars scheduled to open in the next four months; following a full review, we anticipate significantly improving the effectiveness of our marketing expenditure; the roll-out of labour scheduling software across all venues has been completed in recent weeks and is starting to deliver real operational improvements; Simon Dobson, the group’s new Food director, joined the business towards the end of January to drive a step change in food sales and profitability; pre-booked revenue continues to grow and it is anticipated that further strong growth in this important income stream will be achieved. The group’s new chief executive officer, Rob Pitcher, joins the business on 25 June 2018.”

Majestic Wine reports sales and profit growth: Majestic Wine Group has reported sales up 2.3% (+4.0% underlying) to £476.1m in the 52 week ended 2 April 2028, driven by 11.3% underlying sales growth in Naked Wines. This was a £9.8m improvement in Profit Before Tax (PBT) to £8.3m (FY17: £1.5m loss) and underlying adjusted PBT up 63.0% to £17.2m. Naked Wines was the key driver of profit growth with adjusted underlying Ebit six times higher than FY17. Majestic Retail profitability was flat with underlying sales growth of 1.9% and improved cost controls offset by foreign exchange pressures on margin. Rowan Gormley, group chief executive, said: “We are making headway despite headwinds. This past year we: delivered profitable growth, despite a tough UK market, which is a testament to our people, our international positioning and the robustness of our model; achieved greater efficiency throughout the business; paid down our debt to below our target gearing level, and extended our access to borrowing should we need it. Looking forward, we expect the UK market to remain tough, possibly even tougher than last year. Certainly trading since year end has been harder than the prior year in the UK. Despite this, we expect to hit FY19 market expectations because unlike many retailers: we are able to generate growth through profitable customer acquisition, even in tough markets; 20% of our business takes place in the growth markets of the USA and Australia, 45% of group sales are online; we have already, or will shortly, complete projects that eliminate unproductive work, freeing up our people to engage with customers and allowing us to reduce cost. If the UK is headed for a retail crisis, as some commentators are suggesting, then we are planning for a great crisis. We founded Naked Wines during the financial crisis of 2008 and proved that investing in acquiring customers and generating loyalty through great products and service, will drive profitable growth even in a tough market.”

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