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Tue 2nd Oct 2018 - Revolution reports disappointing year, like-for-like sales minus 5% in recent weeks
Revolution reports disappointing year, like-for-like sales minus 5% in recent weeks: Revolution Bars Group, the UK operator of 76 premium bars, trading under the Revolution and Revolución de Cuba brands, has reported sales of £141.9m (FY17: £130.5m), up 8.7% in the 52 weeks ended 30 June 2018. Chairman Keith Edelman described the year as disappointing with like-for-like sales dropping to minus 5% in recent weeks. The company said there is no further update on a possible acquisition of Deltic Group following the group’s statement regarding media speculation on 7 September 2018. It added: “The board will notify shareholders of any developments.” There was Full Year like-for-like sales decline of 0.6% following 1.9% growth in H1. Adjusted Ebitda was £15.0m (FY17 Restated: £15.1m), in line with revised guidance. It made an operating loss £3.0m (FY17 Restated: Operating profit £5.5m) impacted by exceptional costs of £11.1m. Half Two was ‘impacted by the uncertainty following corporate activity, management change, extremes of weather and the FIFA World Cup’. Estate expansion continued throughout the period, with six new sites contributing to 8.7% total sales growth. New sites are achieving ‘good overall returns’. Rob Pitcher, the new chief executive, started six days before the year-end. The company stated: “All aspects of the business have been reviewed, issues identified and actions planned to improve performance. Most recent like-for-like sales are -5%, but benefits of new initiatives put in place by new chief executive yet to work through. Pre-booked Christmas sales up 20.3% (like-for-like: 14%) on same time last year, which augurs well for Q2 that historically has contributed just under half of full year profit. Two sites have opened since year-end, with three more expected by the end of November to capture the Christmas trade. New sites are performing well and our new site pipeline remains strong.” Pitcher said: “This is a fundamentally good business which has seen significant disruption over the past year and factors outside of its control. 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. Our confidence in the potential of the group is undiminished.” Chairman Keith Edelman added: “We estimate that the ‘Beast from the East’ disrupted sales by circa £0.5m in early March; Easter trading was disrupted by the failure of Conviviality, owner of the group’s principal drinks supplier Matthew Clark, further distracting management from implementing new initiatives; and the hottest summer on record combined with England’s extended World Cup run detracted from the appeal of our bars, which have neither TVs nor significant outside areas. These factors together with an unsettled workforce and the widely documented cost pressures faced by the whole sector led to 2017/18 being a disappointing year and one from which we expect to significantly improve upon. Like-for-like sales in the first half (up to and including week 27 to include New Year’s Eve in both periods) were +1.9%, aided by record Christmas sales. In the second half (excluding week 27) like for like sales were -3.2%, Under Rob Pitcher, we anticipate following the same strategy with two strong but differing brands which we will continue to grow. Since the period end, we have opened Revolution Glasgow and Revolucion de Cuba Southampton with both trading in line with expectations. We expect to deliver five new openings in the first half, with an additional three sites expected to open prior to the end of November 2018 to benefit from the important Christmas trading period. The strength of our new venue pipeline and good overall returns of our new sites gives us confidence in the brands and achieving further growth. Rob Pitcher’s operational and executional focus, recently-strengthened operations teams, and the good range of initiatives planned or being implemented means that our belief in the potential of the business is undiminished.”


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