Member Info for EdGasket

We believe there are elevated risks to the Revolution Bars (RBG) investment case following a profit warning. Do not buy the shares at 122.01p as a recovery trade until there is evidence problems facing the cocktails-tofood specialist can be fixed. We fear that the company could have another profit warning in the near term given difficult market conditions. Shares in Revolution Bars fell by 40% on 19 May when it said costs were higher than expected, two sites had to be closed for refurbishment and new sites (mostly the Revolución de Cuba brand) were taking longer than anticipated to hit full profitability. The severe share price decline suggests the market has lost confidence in the business, and for good reason. Higher wage costs shouldn’t have been a surprise to management. They will have known about these extra costs when reporting full year results on 28 February, so that is a feeble excuse. The decision to temporarily close a site in Blackpool in March should also have been known at the time of the full year results. Canaccord Genuity analyst Nigel Parson attributes 70% of the profit warning to poor budgeting rather than operational issues. ‘If this proves to be right, then we view the profit warning as an irritating blip that can be sorted quickly.’ While we think the analyst makes a valid point, Revolution Bars has a major credibility problem Profit warning contains two feeble excuses and one major cause for concern the slow take-up of the new Revolución de Cuba sites is a major concern. Five of this year’s six new site openings are the Revolución de Cuba format, plus half of next year’s planned openings. ‘Under our new forecasts, Revolution would need to fund capital expenditure ahead of organic cash flow instead of generating a surplus,’ says Parson, who has slashed his earnings per share forecast by 28% this year to 10.2p and by 34% to 11.4p for 2018. ‘In the short term, it can cope as the balance sheet is in good shape with £5m cash on the balance sheet and net debt of c£0.1m and a £10m facility to draw upon. But, if there is a deeper issue we believe it will need to slow the opening programme, or cut the dividend or both. Not so good.’ The casual dining market is in oversupply and rising inflation is putting pressure on consumer spending. Several restaurant businesses have issued profit warnings this year, saying trading conditions are tough. In contrast, pubs operator Marston’s (MARS) on 18 May reported decent trading. Its chief executive Ralph Findlay told Shares that pubs tend to outperform restaurants and casual dining sites when customers are feeling under pressure. He said Marston’s had recently seen strong demand for cocktails, so perhaps Revolution Bars is losing custom to pubs? (DC)

We believe there are elevated risks to the Revolution Bars (RBG) investment case following a profit warning. Do not buy the shares at 122.01p as a recovery trade until there is evidence problems facing the cocktails-tofood specialist can be fixed. We fear that the company could have another profit warning in the near term given difficult market conditions. Shares in Revolution Bars fell by 40% on 19 May when it said costs were higher than expected, two sites had to be closed for refurbishment and new sites (mostly the Revolución de Cuba brand) were taking longer than anticipated to hit full profitability. The severe share price decline suggests the market has lost confidence in the business, and for good reason. Higher wage costs shouldn’t have been a surprise to management. They will have known about these extra costs when reporting full year results on 28 February, so that is a feeble excuse. The decision to temporarily close a site in Blackpool in March should also have been known at the time of the full year results. Canaccord Genuity analyst Nigel Parson attributes 70% of the profit warning to poor budgeting rather than operational issues. ‘If this proves to be right, then we view the profit warning as an irritating blip that can be sorted quickly.’ While we think the analyst makes a valid point, Revolution Bars has a major credibility problem Profit warning contains two feeble excuses and one major cause for concern the slow take-up of the new Revolución de Cuba sites is a major concern. Five of this year’s six new site openings are the Revolución de Cuba format, plus half of next year’s planned openings. ‘Under our new forecasts, Revolution would need to fund capital expenditure ahead of organic cash flow instead of generating a surplus,’ says Parson, who has slashed his earnings per share forecast by 28% this year to 10.2p and by 34% to 11.4p for 2018. ‘In the short term, it can cope as the balance sheet is in good shape with £5m cash on the balance sheet and net debt of c£0.1m and a £10m facility to draw upon. But, if there is a deeper issue we believe it will need to slow the opening programme, or cut the dividend or both. Not so good.’ The casual dining market is in oversupply and rising inflation is putting pressure on consumer spending. Several restaurant businesses have issued profit warnings this year, saying trading conditions are tough. In contrast, pubs operator Marston’s (MARS) on 18 May reported decent trading. Its chief executive Ralph Findlay told Shares that pubs tend to outperform restaurants and casual dining sites when customers are feeling under pressure. He said Marston’s had recently seen strong demand for cocktails, so perhaps Revolution Bars is losing custom to pubs? (DC)

June 23rd then. Only 5340 shares traded today even with news expected and announced and 3500 of them were mine. Think punters have lost interest.

RTN is a much bigger group and not reliant on one theme. However it also is having costs problems and is also way above asset level. Try MAB or MARS for better prospects in this sector imho.

'Trendy Bars' - exactly my point, how long will it remain trendy before something else becomes 'trndy' in its place? From the interim results Net Assets are 43.5m against a market cap of 58m. I suggest you go back to school on that one.

Fill yer boots again BTFATH1; you know you want to; after all it will soon be 160p/170p just like you said. ...or maybe 100p

'.... and not 1 share traded hands today' Maybe its because graham-wales has run out of money; no-one else was buying were they?

Maybe its just the business. Is there really big money in 'helping businesses change energy supplier'? Surely they can simply do that themselves without UTW's help or am I missing something?

Can they actually sell anything for more than they paid for it?

16:26 25000 @ 120p ...think you'll find that was a sell

Rookie error doubling down on your initial mistake.

MAB also has 4.4Bn of assets so net tangible assets per share are approx. 300p. Comfortably above the share price by at least 20%; a good enough cushion against hard times.

The history of listed bars and nightclubs is that they are hyped up for the initial listing but most go bust. Look at SFI, Luminar, Eclectic Bar, Yates, Chorion and the rest. RBG has two similar themes; punters soon get bored and moeve on elsewhere. This was rated as a growth stock but is now clearly in the struggling to hang on category! Sub 100p soon if not on Monday.

Not a good sign; we'll see 100p Monday as people who missed selling today rush to get what they can.

It's still overvalued. Before today it was way overvalued. A short mugs rally and its headed back down again. 100p on Monday

I wasn't the person who started name calling!

I think that applies more to the people holding this share at a loss.

I have read it and it looks pants. No growth, veiled profit warnings but a share price still at a premium to it's peers.

Don't think so. Compare with MAB which is below asset value and MARS with much higher yield. Think this will see 100p before 190p.

There's better value in existing pub companies like MARS and MAB