25th Mar 2015 08:38
LONDON (Alliance News) - Eclectic Bar Group PLC shares plunged on Wednesday after the company reported a wider pretax loss despite an uptick in revenue as it was hit by less student drinking, increased competition, and underperforming new sites.
Eclectic said its pretax loss for the 26 weeks to December 28 was GBP525,000, compared to a GBP254,000 loss a year earlier. Revenue rose to GBP12.3 million from GBP11 million, but this was offset by higher operating costs.
The company said trading in the half was in line with the update it provided in November, when it issued a profit warning due to a lacklustre freshers' week period.
Eclectic said its first half trading was held back by university undergraduates across the UK being less active in the marketplace during freshers' weeks period and said this market has been less predictable throughout the academic year so far.
In addition, it was hit by increased competition in a number of locations and said the Lola Lo bar in Derby and the Dirty Blonde bar in Brighton have both failed to meet expectations.
Eclectic said it will focus on trying to mitigate the effect of these issues in the second half, adding trading over Christmas was "encouraging" and it continues to see good performances around occasion-led calendar events. But, outside of this, trading is still difficult and it said it expects increased competition to further hit its results for the year.
It said there has been no return in mid-week sales since students returned in late January and early February and expects the current trading environment to become the new base for the foreseeable future. As a result, it expects trading levels seen in the latter portion of the first half to remain in place for the rest of the year.
"Eclectic has some of the best locations and premium brands in the UK. Whilst this has been a challenging period for the company, I am confident that the actions we have taken have made Eclectic a stronger company which will continue to build value for our shareholders over the medium term," said Reuben Harley, Eclectic's Chief Executive.
Shares in Eclectic were down 33% to 62.00 pence in early trade, the worst performer in the AIM All-Share.
By Sam Unsted; [email protected]; @SamUAtAlliance
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