Shares of Manchester-based Revolution Bars Group plc rose 5.5% on Wednesday after it published a trading update for the 26 weeks ended December 28, 2019, and for the Christmas trading period through New Year’s Eve.
“For the seventh consecutive year, the group achieved record sales over the festive period,” said Revolution Bars Group.
“Like-for-like sales in the important four week trading period leading up to and including New Year’s Eve were 4.0% higher than last year.
“During this four-week period, weekly sales per venue averaged over £65,000.”
The trading update added: “Total revenue for the 26 weeks ended 28 December 2019 was £81.2m (H1 FY19: £78.5m), an increase of +3.4%.
“Consistent with the board’s strategy to focus capex 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 board expects the group’s interim results to be published on 26 February 2020 with underlying earnings, as measured by adjusted EBITDA on a pre-IFRS16 basis, to have improved in line with market expectations …”
Crucially, the company added: “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 on-going full year operational cash flows by c£1.2m per annum.”
Revolution Bars CEO 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.”