Revolution EBITDA expected to be at ‘same level as last year’

Revolution EBITDA expected to be at ‘same level as last year’
19/05/2017 - 10:12
Revolution Bars Group has said that it expects EBITDA to remain ‘broadly at the same level as last year’ in its trading update for the 52 weeks to July 1st 2017.

The company reported that underlying sales performance of the business has remained positive in the second half with like for like sales continuing to grow by 1.7% for the year to date and gross margins remaining as expected.

Revolution has opened five new Revolucion De Cubas in the last 12 months and one new Revolution Bar, which the company said has taken longer to mature to full profitability than originally expected.

The bar group stated that the increased costs of the living wage, minimum wage, apprenticeship levy and increase in inflation will be more than anticipated in the current year.

Paul Hickman, analyst at investment intelligence firm Edison Investment Research, said: “This is really the first negative news from Revolution since its IPO in March 2015, breaking a record of smooth growth since then. Based on what’s been said, it appears more of a growth setback than anything fundamental. It may be early evidence in the pubs and bars space of consumers rotating away from premium offers.

“However, the message is ambiguous: on one hand the company says that like-for-like sales remain in positive territory without compromising gross margins, but on the other, new sites are taking longer to mature. It is not confirmed whether today’s announcement is connected with the surprise departure of the finance director two weeks ago. However, the fact that cost headwinds are now seen as affecting profit guidance given as recently as February does raise some questions on that guidance.”

Since Revolution has given the update, shares have dropped over 30%.

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