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Key Points:
- Loungers reported 4.7% LFL sales growth, continuing its strong performance in the UK hospitality market.
- Total revenue increased by 19.2% to £178.3 million, with the Group making progress toward its pre-Covid EBITDA margin target of 13.5%.
- The Group opened 17 new sites, with a total portfolio of 273 locations, and plans to open 18 more in the second half of the year.
Loungers (LSE:LGRS), a leading UK operator of café/bar/restaurants under the Lounge, Cosy Club, and Brightside brands, has released a trading update for the 24 weeks ending 6 October 2024. The update reveals robust financial performance and a continued focus on expansion, showcasing the Group's ability to outperform the broader UK hospitality sector despite challenging market conditions.
For the 24-week period, Loungers reported like-for-like (LFL) sales growth of 4.7% compared to the previous year. This follows the 5.0% LFL sales growth reported for the 11 weeks to 7 July 2024. The sustained growth highlights Loungers’ capacity to navigate the hospitality landscape successfully, which has faced significant disruptions in recent years due to the Covid-19 pandemic and economic uncertainties. Loungers' consistent outperformance of the broader UK hospitality market speaks to its operational strengths and popularity among customers.
The Group also achieved total revenue of £178.3 million during this period, marking a 19.2% increase compared to £149.6 million in the same period last year. This significant rise in revenue reflects both LFL sales growth and an aggressive expansion strategy. Loungers continues to work toward its goal of restoring its pre-Covid EBITDA margin to 13.5%, a target that is seen as essential for maintaining long-term financial health.
Loungers' balance sheet remains in a solid position, with non-property net debt decreasing to £12.2 million as of 6 October 2024, compared to £14.3 million on 1 October 2023. This reduction in debt strengthens the company’s financial flexibility, allowing it to continue pursuing growth opportunities while maintaining a prudent approach to debt management.
One of the standout achievements for Loungers during this period has been its expansion. The Group opened 17 new sites, bringing its total portfolio to 273 locations as of 6 October 2024. This marks a slight increase compared to the 16 new sites opened during the same period in the previous financial year (H1 FY24). Among the new openings, the Ritorno Lounge on Bristol’s harbourside, which opened in July, has been particularly notable. According to Loungers, the Ritorno Lounge has had the strongest start for a new site in the Group’s 22-year history, a significant achievement that underscores the brand’s appeal and operational success.
The Group remains committed to its expansion strategy, with an additional 18 sites slated to open in the second half of the financial year. This builds on the momentum of the previous financial year, where Loungers added 36 new sites to its portfolio. The ongoing expansion reflects the company’s confidence in its growth model and its ability to capture a larger share of the UK’s casual dining market.
Loungers operates a diversified brand portfolio, with its Lounge, Cosy Club, and Brightside outlets offering a range of all-day dining options that appeal to a broad demographic. This flexibility has enabled the Group to perform well across different locations and adapt to various market conditions. As it continues its roll-out program, Loungers is well-positioned to leverage its established reputation and growing footprint to drive future growth.
Looking ahead, Loungers will focus on maintaining its current trajectory of sales growth, improving its EBITDA margins, and executing its ambitious expansion plans. Despite broader economic challenges, including inflation and shifting consumer spending patterns, the Group’s trading update reflects a business that is not only resilient but also poised for continued success.
