Bars group reports record Christmas sales, and closes loss-making sites

Revolution Bars Group reported record Christmas trading for the seventh consecutive year, in a trading update today.

The Ashton-under-Lyne business, which trades under the Revolution and Revolucion de Cuba brands, provided an update for the 26 weeks ended December 28, 2019.

It said in the four weeks of festive trading, to December 31, like-for-like sales 4% higher than last year. During this four-week period, weekly sales per venue averaged more than £65,000.

During the 26 week period, ended December 28, total revenue was £81.2m, compared with £78.5m the previous year, an increase of 3.4%.

Consistent with the board’s strategy to focus capital expenditure and management resources on the existing estate, there were no new openings in the period under review.

Three under-performing Revolution bars were closed in the period at Swansea, Wood Street in Liverpool, and Macclesfield.

The Macclesfield lease has been surrendered. Sales growth in the period was driven primarily by the annualisation of the five venues opened during the first half of financial year 2019.

Like-for-like sales for the 26 weeks ended December 28, were 1.2% higher, representing a further improvement on the 0.7% increase reported after 13 weeks.

Sales trends in October and November broadly followed those experienced in the first quarter and, as anticipated due to strong growth in pre-booked party income, stepped up in December.

Revolucion de Cuba achieved strong like-for-like sales growth throughout the period while there was a further strengthening in the Revolution brand like-for-like sales trend over the course of the period.

The board expects the group’s interim results to be published on February 26, with underlying earnings, as measured by adjusted EBITDA on a pre-IFRS16 basis, to have improved in line with market expectations.

As previously advised, these results will incorporate the new accounting standard on leasing arrangements (IFRS16) using the modified retrospective approach.

Results will be published on a pre- and post-IFRS16 basis in order to allow true comparability against the prior period results.

The board is also pleased to announce that since the end of the interim reporting period, it has exchanged contracts with real estate investment company Aprirose, landlord of nine of the group’s properties, to surrender five leases of loss-making sites and re-gear a further four leases with a small net rent reduction, but with a 25-year term.

The transaction is expected to complete in March on payment by the group of a premium equivalent to less than three times the annual trading losses of the five lease surrenders.

The net effect of these transactions is to improve the group’s ongoing full-year operational cash flows by around £1.2m per annum.

Chief executive Rob Pitcher said: “I am delighted with our Christmas trading and the steady improvement in our like-for-like sales performance over the first half is further evidence that our key initiatives are driving both operational and financial improvement.

“Considerable strides have been made in rebuilding customer loyalty and driving sales and profit from the existing estate, creating a stronger business with significant cash generation.

“Whilst external cost pressures persist, we will continue to manage cautiously, using excess cash to reduce indebtedness below one times EBTIDA before we will consider further expansion opportunities.”