Loungers bucks bars trend

It has not been a good year for hospitality sector in general, but particularly for pubs and bars. Loungers (LON: LGRS) is reporting its first half figures on 2 December and it has done better than most. The most recent trading statement was much better than anticipated and the latest results will show how well trading is holding up.

Bristol-based Loungers operates café/bar/restaurants in England and Wales under two brands: Lounge and Cosy Club.

Like-for-like sales in the 13 weeks to the beginning of October were 25% ahead, when the pubs and bars sector sales were continuing to decline.

Trading was so far ahead of expectations, that the recent lockdown will be offset by the strong trading before the month started.

Interims

Peel Hunt expects first half revenues to reach £52m, compared with £79.8m in the corresponding period. EBITDA is expected to be £7.6m. This includes 12 weeks when there was no trading, as well as subsequent restrictions.

Net debt is unlikely to have fallen from the £12.7m, excluding leases, at 6 September.

Forecasts

Second half revenues are expected to be higher than in the first half. Even so, the second half profit is currently expected to be much smaller. This provides scope for upgrades even if the general trading outlook does not improve.

Loungers was crowned best newcomer at the 2019 AIM Awards. It has managed to maintain a share price above the 200p placing price in April 2019 – currently 207p. The peak in February was 270p.

There are 168 sites operating and that includes three opened in recent months. Loungers has shown that it is a highly resilient business.