I would say good morning, but it's been a lousy morning so far - with a profit warning from one of my largest long positions - Revolution Bars (LON:RBG) . So I'll focus on that mainly.

Graham's doing a separate report today - which is taking shape here.

However, I'I need to get my head around what's gone wrong at RBG, and report to you - plus hear your views too of course, in the comments section below.


Revolution Bars (LON:RBG)

Share price: 139.75p (down 31.5% today)
No. shares: 50.0m
Market cap: £69.9m

(at the time of writing, I hold a long position in this share)

Trading update (profit warning) - covering the year (to date) ending 1 Jul 2017.

This is an expanding operator of town/city centre bars with a premium drinks offering (cocktail-driven).

The share price has been clobbered this morning by a profit warning. Let's dig into what's gone wrong.

Revenues - this sounds alright;

The underlying sales performance of the business has remained positive in the second half with like for like sales continuing to grow by 1.7% for the year to date ...


The company last reported LFL sales at 1.7% for the 8 weeks to 25 Feb 2017

Prior to that, it reported LFL sales for H1 at 2.0%

Therefore, this implies that LFL sales for the most recent 11 weeks to 13 May 2017 must have been lower than 1.7%, in order to drag the average at the H1 stage down from 2.0% to 1.7%.

In order to estimate the most recent LFL sales performance, I've knocked up a simple spreadsheet (NB. this ignores seasonality):


591ebd26410d0RBG_spreadsheet.PNG



This is all about LFL sales. So in column D I've plugged in the reported LFL sales - the beige section is the 2.0% LFL sales increase for H1, as reported on 28 Feb 2017.

The yellow section in column D is the 1.7% LFL sales also reported on 28 Feb 2017.

The blue section is my estimate, by trial and error, to arrive at a cumulative total of 1.7% LFL for the year to date, as reported today. This is in cell H46 above.

So the key takeaway from…

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