Shareholders of Loungers PLC (LON: LGRS) have seen their shares spike on Wednesday morning after the firm posted a bullish interim update.
Loungers is an operator of café/ bar/ restaurants across England and Wales under two distinct but complementary brands, Lounge and Cosy Club.
It is the only growing all-day operator of scale in the UK, with a strong reputation for value for money and sites that offer something for everyone regardless of age, demographic or gender. The Company operates successfully in a diverse range of different sites and locations across England and Wales.
Shares of Loungers spiked 3.8% to 205p following the announcement. 4/12/19 10:20BST.
The firm has seen a successful period of trading in 2019, when in August the firm posted impressive figures which saw revenues rise 26.4% on a year-on-year basis, to £153.0 million, and adjusted operating profit bounced 23.3% to £12.4 million.
The firm posted another “another strong” set of interim results, with revenue rising over 20%.
Loungers own 161 bars, cafes and restaurants across England and Wales, and are a vastly expanding brand.
For the 24 weeks to October 6, Loungers revenue climbed 22% on the year before to £79.8 million, with the pretax loss narrowing to £2.5 million from £4.3 million. On a like-for-like basis, revenue growth was 5.4%, a figure Loungers said was “sector leading”.
Sector competitors such as Gregs (LON: GRG) have also seen an impressive trading period, as the firm saw its shares soar at the start of November when it saw its total sales climb by 12.4%.
Additionally, FTSE250 listed J D Wetherspoon plc (LON: JDW) saw their shares spike following a bullish update alluding to rising sales of 5.3%.
Loungers reported an adjusted pretax profit of £2.6 million, after a £4.3 million loss the year prior.
It is on track to open 25 new sites during its current financial year, and has a “strong” pipeline further ahead. The target is for 25 new sites to open per year.
“I am delighted to announce another strong set of results which continue to highlight our consistent outperformance against the market,” said Chief Executive Nick Collins.
“This will be the fifth consecutive year we have opened at least 20 new sites and we remain excited by the prospects and potential for both our Lounge and Cosy Club formats and the significant opportunity we have ahead of us.”
Loungers does not currently pay a dividend, as it wants to keep earnings to reinvest into new store openings. However, it will eventually consider a dividend.
“Looking ahead, the strength of our financial 2020 openings to date and the continued evolution of our offer further underpins our confidence in continuing our current growth rate of 25 new openings per year and the potential for more than 400 Lounges and 100 Cosy Clubs across the UK,” added CEO Collins.
In a time where there has been an ‘apparent’ market slowdown as quoted by rivals such as Fuller, Smith & Turner (LON: FSTA) it seems that Loungers are defying the odds, and shareholders will certainly be impressed and expect strong trading in the festive season.
