30th Nov 2022 12:35
(Alliance News) - Loungers PLC on Wednesday reported a slump in pretax profit, but said it continues to outperform the market as it plots further expansions.
In the 24 weeks that ended October 2, Loungers' pretax profit slumped 78% to GBP2.8 million from GBP12.8 million in the same period last year as the company's cost of sales widened.
Although the operator of restaurants including Lounge and Cosy Club's revenue increased 19% to GBP122.3 million from GBP102.4 million, its cost of sales widened to GBP74.4 million from GBP56.3 million. Its administrative expenses also widened to GBP41.9 million from GBP32.6 million.
Chief Executive Officer Nick Collins said: "I am delighted with the consistent strength of our sales performance. Our out-performance of the market has continued unabated and reflects both our unique positioning as well as the amazing hospitality and hard-work of our teams.
"We aren't immune to the inflationary pressures impacting our sector, but we have worked hard to strike the right balance between growing market share and managing margin pressures. These numbers would suggest we have got the balance about right," he continued.
Loungers opened 11 new sites in the period, and a further four opened post-period end. It has added a fifth build team expanding its "new site opening capacity" to between 32 and 34 sites per year.
It will also shortly be opening its first Brightside restaurant in an attempt to "reinvigorate roadside dining in the UK".
The company noted that its "broad customer demographic" reduces reliance on any one group while it has also strengthened and maintained its "value for money principles". It hopes these will enable it to out-perform in a recessionary environment.
Loungers also hedged its utility costs in May 2020 until September 2024, helping it to manage the inflationary environment.
Positive momentum has continued over the first few weeks of the third quarter, the company said.
Collins said: "The short-term outlook is uncertain, but we take confidence from the resilience of current trading in both brands. We are excited about the coming months and are well-placed to take advantage of opportunities through our continued growth. Lounge and Cosy Club both have enormous untapped roll-out potential, and we are very excited about the imminent launch of our new roadside brand Brightside."
Shares in Loungers were trading 0.5% higher at 193.00 pence each in London on Wednesday afternoon.
By Chris Dorrell; [email protected]
Copyright 2022 Alliance News Limited. All Rights Reserved.
Related Shares:
Loungers Plc