To a large audience, Loungers presented the 1H results under IFRS 16 rules. The market cap is currently £182m, IPOed in April where £84m was raised. The share price has suffered from being a consumer related stock but the CEO stated they had not seem any consumer ‘shift’ and ‘pleased’ with trading. Lfl sales growth was +5.4% ( total sales +22%) with growth ‘broadly spread’ with 60% of customers female and only 8% of trade in the mornings. 10 sites were opened in the 1H and 25 for the full year the target for the 5th year so making 161 for the period (133 Loungers neighbourhood café/pub concept, smaller towns) and 23 Cozy Clubs, formal bar/restaurant offer in city centres). The target number is for 400 Loungers, 100 Cozy’s in the UK.

Using IFRS 16, 1H revenue was up 22% to £79m (£65m), adjusted EBITDA £14m (£11.6m), adjusted eps 2.5p and a loss before tax of £2.4m recorded. IFRS debt was £127m with £98m lease liabilities. In old accounting money, adjusted EBITDA was £10.2m, eps 3.4p and PBT £3.56m and debt £29m. Gross margin was 41.5%. The new site pipeline remains strong for 2021/22 with 25 the target. Five new sites are opening soon in the 2H with one in Sutton opening on the 12/12 being the closes to London. Net cash generated was up 44% to £9.2m under old accounting rules. Net capex for the 1H was £11m with new site costs £9m, splash & dash makeovers £208k (to 5 sites) and maintenance of £813k, being the usual 1% of revenues. Two year LFL growth is now 12%.

Gross margins were up 90bp helped by food margins being up 50bp ( price increases, efficiencies and input costs such as utilities falling) with labour efficiences helping by 40bp. 2H margins will be greater than 1H due to the seasonal bias and helped by recent price rises. The new drinks contract brings in more contemporary beer/wine brands and regional pricing is being trailled in 20 sites planning to adding between 20-40p a pint. However care will be taken for the prioce rise not to become a customer discussion topic. Premiumisation of the beer brands has happened with stella , Becks Goose out (no complaints at all) with Punk IPA, Moretti, Amstel in and pricing to ‘remain affordable’ but ‘a healthy margin benefit’. The new wine choice will helped…

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