Loungers reports strong performance and is 'sufficiently confident' about the future

Excluding the positive impacts of Eat Out to Help Out and the VAT reduction, like for like sales were reported to be positive over the 9 weeks from 13 July to 13 September 2020

The announcement comes on the day (16 September) that the company opens it first Lounge post lockdown, Ponto Lounge in Hull. The company says it plans to open four more venues by the end of the current financial year and believes it has benefited from a lack of exposure in London as well as the reduction in the number of food and drink operators as a result of the pandemic.

Non-property net debt has been reduced from £35m in April to £24.5m in September.

The update was reported in full year results to 21 April 2019, which saw an increase in net turnover of 8.8% to £166.5m.

Adjusted EBITDA was up 0.8% £28.7m, while loss before tax was £14.7m, up from £6.7m in 2019.

With only the final eight weeks of the period affected by coronavirus, Loungers reported like for like sales growth up 4.5% in the 44 weeks to 23 February 2020, during which time it opened 21 new sites.

Nick Collins, CEO of Loungers, says the strength of the performance since re-opening highlights “how strategically well-positioned we are in both Lounge and Cosy Club”.

“Our like for like sales of +30% over the last 10 weeks includes the remarkable four weeks of the ‘Eat Out to Help Out’ scheme and the government’s support for our sector continues to be much appreciated,” he says.

“More importantly, however, having fully re-opened our underlying sales are in growth even without this support. We have focused on providing amazing hospitality, whilst reassuring our teams and customers the Lounges and Cosy Clubs are a safe environment, and our customers have been quick to return.

“During lockdown we were confident the flexibility of our all-day offer, our suburban and market-town locations and our focus on hospitality and community would ensure we emerged strongly. I believe these results have confirmed that to be the case.

Collins warned of the potential for further interruption to trade but says the Coronavirus had strengthened the group’s belief in the potential scale of both brands, with “behavioural shifts being witnessed further underline this”.

He says Loungers will “cautiously re-start” its roll-out programme and get back to opening 25 sites a year in due course.

“I would like to thank our team across the UK for their extraordinary contribution over the last six months. It has been an immensely challenging period and their determination and hard-work have allowed us to not just get through it, but to emerge a better business.”

“We are clearly still in unprecedented times and the coming weeks and months are almost certainly going to be uncertain at best and possibly challenging,” says chairman Alex Reilley.

“That said, I think we have every reason to be optimistic and excited for the future. Having reopened has given us significant competitive advantage over those businesses that have been slower to do so.”

Reilley says the location of many of the company’s sites means it is well placed for the future. “With the undeniable change under way in the way people live, and more specifically work, we believe we are extremely well-placed to benefit,” he says.

“The suburban and small town locations of the vast majority of our Lounge estate have remained strong and our large, airy Cosy Club venues - coupled with an offer that is sufficiently differentiated from our competitors - mean that both brands are in a strong position to prosper.

“Our lack of exposure to central London and travel hubs has meant that the strength of performance across the business is both sustainable and consistent. This, together with a reduction in the number of food and drink operators, positions Loungers well to benefit from a significant contraction in supply.

Following reopening, we are sufficiently confident and excited to be resuming our roll-out – albeit we will do so cautiously, and it will take some months for us to get back up to a run-rate of 25 sites a year.

“However, we have some high quality sites within our current pipeline and will be able to benefit from some exciting opportunities against a backdrop of an extremely soft property market.”