Revolution Bars pleased with turnaround progress as losses deepen

On-licence operator Revolution Bars Group reported a 6.7% improvement in sales in its preliminary results on Tuesday, to £151.4m for the year.

The London-listed company said its adjusted EBITDA was down to £11.1m for the 52 weeks ended 29 June, from £15m in the 2018 financial year, while its adjusted profit before tax slipped to £3m from £8m.

Adjusted earnings per share totalled 3.4p, sliding from 13p year-on-year, while its loss before tax widened to £5.6m from £3.6m.

Losses per share totalled 10.4p, deepening from 5.7p a year earlier, with Revolution reporting net cash flow from operating activities of £10.6m, compared to £10.2m in its 2018 results.

The board said the company had made “considerable” progress in 2019, which it described as a “year of transition”, with the business stabilised.

It noted that its full-year results were in line with market expectations, and said workstreams initiated in the financial year had started to drive performance improvements.

Like-for-like sales for the period were down 3.5%, which the board claimed masked an improving trend, with first half like-for-like sales down 4.0%, while the second half improved to a drop of 2.9% and the fourth quarter to a slip of 1.8%.

The company committed to open five new bars in the period, all in the first half, with the two under the main ‘Revolution’ brand said to be trading “strongly” and reaffirming the brand’s relevance, while the three ‘Revolución de Cuba’-branded bars were said to be “encouraging”, but taking longer to reach maturity.

Looking at its current trading, Revolution Bars said it was moving from a year of stabilisation into a year of consolidation, with its strategy now focussed on building on the improvements gained, investing in its existing estate and reducing its bank borrowings.

Annual cost savings of £1.5m, as announced at the interim results, had now been implemented and were expected to be fully realised in the 2020 financial year.

At the end of the 2019 financial year, like-for-like sales growth was achieved in five of the last seven weeks, and in the first quarter of the 2020 financial year, like-for-like sales were up 0.7%, and after adjusting for refurbishment closure days, were up 1.2%.

Six bars had already been refurbished during the first quarter, including the flagship Revolución de Cuba in Manchester, and were said to be showing encouraging sales uplifts in their first few weeks of trading.

Nine further refurbishments were planned for the remainder of the financial year.

Pre-booked Christmas sales were described as “strong”, increasing 15%, or 8% on a like-for-like basis, on the same time last year.

“A return to positive like-for-like sales in the first quarter of the current year reflects the hard work by the team in stabilising the business,” said Revolution chief executive officer Rob Pitcher.

“We will invest in our team, our brand experience and our estate to continue to improve performance.”

Pitcher said the firm’s progress demonstrated that its business was “delighting” its guests, and was both profitable and cash generative.

“We will utilise surplus cash to reduce debt to such an extent whereby any return to expansion of the estate will be self-funding.”