Safestay shares tumbled on Monday after warning of continued financial pressure after a weaker-than-expected year, as the hostel operator heads into the seasonally quiet winter.
The company said summer trading had been softer than hoped and that, despite a recent improvement, its year-to-date performance remained below its original expectations.
It said cash flow is typically challenging over the winter, and while property disposals and tight cash management have supported liquidity, it continues to face pressure and is evaluating measures to manage working capital into 2027.
Safestay said it had used proceeds from the sale of its Glasgow property, and part of the proceeds from Holland Park, to cut its bank borrowings to £9.1m from £13.6m in June. It is exploring further options to strengthen its position, including selling more properties and reviewing its financing, though it cautioned that the timing and outcome are uncertain.
The company also said it was cutting costs, including relocating its head office to one of its hostels and refurbishing sites in Brussels and Lisbon ahead of next summer.
Although the group is seeing both revenue and profits decline, H1 revenue fell to £8.4 million from £9.4 million and adjusted EBITDA dropped to £0.6 million, it still has a property portfolio worth more than its debts.
The low market cap may look attractive on any sign of positivity.