In its latest interim results statement, Loungers revealed while its revenue fell by 33% to £53.5m in the last six months, earnings before interest, taxation, depreciation and amortisation (EBITDA) for the period stood at £13.2m with a slim profit before tax of £117,000.
The period, which covers 11 weeks of lockdown, four weeks of phased reopening, four weeks of Eat Out to Help Out, on top of the introduction of the rule of six, 10pm curfew and local lockdowns in Wales, also saw the group complete an equity raise of £8.1m and agree an additional revolving credit facility of £15m.
After its sites reopened, like-for-like sales growth was 25% between 4 July and 4 October with like-like sales up by 29.9% between 4 July and 13 September largely as a result of the Government-backed Eat Out to Help Out scheme.
What’s more, Loungers also reported non-property net debt of £13.6m, a reduction of £21.9m versus the previous financial year end figure.
In addition, the operator stated that a Cosy Club in Birmingham’s Brindley Place and Ponto Lounge in Hull opened, while Sentado Lounge in Sittingbourne, Kent, opened shortly after the half year end.
On top of this Loungers is currently on site in Stourbridge and Wolverhampton ahead of proposed openings in the new year.
Enthusiasm and optimism
Reflecting on more recent trading, Loungers’ statement revealed that like-for-like sales performance declined only 1.3% versus last year’s figure in the extended period to 4 November despite the impact of the 10pm curfew and the inclusion of 55 sites in tier two and three areas.
In the short term, however, the Group expects a more severe impact on sales given it has 60 sites that will remain closed under England’s tier three, with 91 sites trading in tier two and just three sites in tier one.
What’s more, in Wales Loungers has 14 sites that will be subject to increased restrictions from 4 December.
“The past six months have been challenging, but I am immensely proud of how we have reacted and delivered such a strong performance,” Loungers’ chief executive Nick Collins explained.
“We are fortunate that due to our suburban and market town locations, the flexibility of our offer, and our fantastic team, we have been able to trade well when given the opportunity to open our sites.
“As we dare to look beyond Covid-19, Lounge and Cosy Club have never seemed more relevant, and we approach 2021 with enthusiasm and optimism.”
Need for targeted support
Looking ahead, Collins believes the group’s balance sheet will enable Loungers to revert to a strategy of opening 25 sites a year and investing in high street locations despite “bewildering” and “unfair” restrictions on the hospitality sector.
“With the encouraging news on the development of vaccines, it certainly feels like that time is within reach and I would like to say a huge thank you to our teams for their commitment and engagement over these past difficult months,” he continued.
“We are grateful to the ongoing support we have received from the Government, in particular for our employees through the furlough scheme, and recognise our position is one of relative security.
“However, the recent restrictions imposed are bewildering, unfair, appear to lack any scientific basis and will decimate the hospitality industry across the UK.
“On reopening in July our sector invested hugely in providing a safe environment for people to eat and drink- out, and then demonstrated it was indeed safe during Eat Out to Help Out in August.
“These most recent interventions, at the most critical time of year for the sector, will cost hundreds of thousands of jobs, see the demise of thousands of pubs, bars and restaurants and leave vacant properties across the UK.
“The impact on the livelihoods and health of the sector’s predominantly young workforce and on communities and high streets across the UK will be felt for years to come.
“I would strongly urge the Government to engage with our sector, provide immediate, targeted support where required, and re-consider the ill-thought through policies that have brought much of our industry to its knees.”