Loungers still sees lot of opportunity for expansion in the capital, with openings in Greater London this year to far exceed FY21/22, chief executive Nick Collins has said.
Speaking during an investor conference following its full-year trading update last week, Collins said that while Loungers had only opened one site in London in the last financial year, is has so far opened in Uxbridge, Wembley and Egham, with a site in Ruislip due to open shortly.
“We don’t trade any differently in London than we do anywhere else in the country,” he said. “And the degree of competition really has no bearing whatsoever on how we trade in these locations.”
Loungers opened a record 27 sites last year (26 Lounge and one Cosy Club) – an increase of 18% on the previous year. Performance at these new sites has been strong, with average weekly sales of £30,600, compared to £27,600 at a mature Lounge site.
Collins said its site pipeline remained “very well advanced” and it was now putting sites into FY24. He said he had been out on the road in recent weeks looking at opportunities in Preston, South Wales and Altrincham and is expecting to open at least four Cosy Clubs this year.
While rental levels remain similar to pre-pandemic and there is still strong competition for good sites, it views the property landscape as continuing to offer excellent opportunities, he said.
Commenting on its performance for the 52 weeks to 17 April 2022, Collins said the figures demonstrated that the business was “fundamentally bigger and more profitable than pre-Covid”.
From a like-for-like perspective, sales were running at around 4.5% pre-Covid, and in the year after Covid, levels were +14.2%, he said, adding that since lockdown its mature estate had been generating materially higher levels of sales.
“We’ve had to adapt our operating process to evolving demand… and the customer has changed a little bit as a result of Covid. We have seen significantly higher cocktail sales, we are selling more second drinks and we are selling more puddings,” he said.
“We have viewed the challenges that Covid has presented a positive challenge and I think we have definitely emerged a better business on the other side.”
CFO Gregor Grant updated on its current financial position. The business closed the year with £31.3m of cash and had a term loan of £32.5m, so non-property net debt of just £1.2m.
“A really important point to make here is that at the time of the IPO three years ago, the business had net debt of £27.5m… we are very close now to being in the net cash position,” he added.
