(Sharecast News) - Shares in Revolution Bars Group were plunging on Friday morning, after the company announced a decision to close several locations despite a strong festive trading period.
The AIM-traded firm said that in the four weeks from 4 December to 31 December, it experienced a 9% boost in like-for-like sales, marking its best festive performance since 2019.
While its Revolución de Cuba and Peach Pubs brands saw strong performances, the Revolution brand also showed positive growth on a like-for-like basis during the period.
Looking at the broader picture, the group's like-for-like sales for the first half of the financial year, including New Year's Eve, remained in negative territory at -2.8%.
The company said it would provide a more detailed trading update for the first half of the year on 24 January.
In light of the challenging macroeconomic trading environment and the impending 10.8% increase in the national living wage set for April, the group said it was taking proactive measures to address profitability concerns.
As a result, the company was closing eight of its least profitable establishments to mitigate future losses.
The affected bars included Revolution Bars in Beaconsfield, Derby, Reading, St Peters Liverpool, and Wilmslow, along with Revolución de Cubas in Sheffield and Southampton, and the Playhouse in Newcastle-Under-Lyme.
Negotiations were already underway for five of the bars to either be transferred to different operators or for the rescission of their leases.
To support affected team members, the group said it was implementing redeployment plans, offering alternative employment opportunities within the organisation.
Revolution said after the closures, it would have operations at 58 bars and 22 pubs.
As of 4 January, the group's net debt stood at £18.3m, below the reported figure from July.
"We have had the best festive trading period for four years with all of our brands recording positive like-for -like sales and Revolución de Cuba being the standout performer," said chief executive officer Rob Pitcher.
"However, our younger customers are still feeling the disproportionate effect of the cost-of-living crisis and the national living wage will increase materially in April 2024.
"Therefore, we have taken the difficult yet ultimately beneficial step for the Group to close several bars which are unprofitable."
At 0906 GMT, shares in Revolution Bars Group were down 21.56% at 4.28p.
Reporting by Josh White for Sharecast.com.
Rev Bars (RBG)