Shares in Luminar, the UK's biggest late-night bar and nightclub operator, fell 12% to 569p yesterday after Luminar's chief executive, Steve Thomas, said the target of increasing profit by 15% a year for the next three years was "under threat" for 2002/3.
"How much it is challenged is too early to say," he said. But he is predicting second-half growth trimmed to between 8% and 9%, giving growth of 11.5% for the year. Business had dropped in September, he said, and October had been better, but patchy.
Thomas said Luminar had seen a drop in student customers in September, which he blamed on cash-conscious parents cutting back allowances for their student children. Business had also been hit by the increase in duty on PPSs in May's Budget. At first Luminar increased average prices from £2.75 to £3.25 in order to maintain margins. But discount competition from other high street operators forced it to take the 50p rise off again to maintain volumes.
Thomas's statement also included the news that Luminar is cutting back its roll-out programme from the 41 new openings announced six month ago for 2002/3 to 36, a £10m drop to £80m. Instead more money would be spent on refurbishing the existing estate.
Thomas said development spending was likely to fall to around £70m to £75m in 2003/4, with 30 new openings. He said the firm would still look to make small acquisitions, but he ruled out any bid for SFI or Yates Group.
He added that the company was carrying out a change in its management structure would, in the long term, give more in-depth control, but in the short term it was taking time to settle down.
Greg Feehely, an analyst at the City firm Old Mutual, said putting more money into refurbishments would inevitably mean outlets having to be closed for work to take place, "and thus lost trade, initially". In addition, he said, the level of discounts in the High Street, particularly on PPSs, meant price cuts would also hit takings he said Old Mutual was cutting is estimate of Luminar's profits for the year to February 2003 by 7.3% from around £79.8m to around £74.0m.
Greg Johnson, an industry analyst at ING Financial Markets, said he was particularly concerned that UK licensing reforms, which allow pubs to stay open for longer, could increase competition for nightclub operators.
Yesterday Luminar announced pre-tax profits up 14% to £33.7m in the six months to September 1, broadly in line with expectations.
The Financial Times commented that the company is probably suffering no more than others, and said Luminar is better placed to survive tough times: "Gearing is below 50%, there is a large tranche of freehold property on the balance sheet, and the forward multiple is an undemanding 9. In addition, Christmas falls on a Wednesday this year, and New Year's Eve on a Tuesday - it doesn't get much better than that for late-night operators."
Luminar has 304 outlets in total, including the Chicago Rock Cafe and Jumpin' Jaks chains, and a 12% share of the late-night market.
"How much it is challenged is too early to say," he said. But he is predicting second-half growth trimmed to between 8% and 9%, giving growth of 11.5% for the year. Business had dropped in September, he said, and October had been better, but patchy.
Thomas said Luminar had seen a drop in student customers in September, which he blamed on cash-conscious parents cutting back allowances for their student children. Business had also been hit by the increase in duty on PPSs in May's Budget. At first Luminar increased average prices from £2.75 to £3.25 in order to maintain margins. But discount competition from other high street operators forced it to take the 50p rise off again to maintain volumes.
Thomas's statement also included the news that Luminar is cutting back its roll-out programme from the 41 new openings announced six month ago for 2002/3 to 36, a £10m drop to £80m. Instead more money would be spent on refurbishing the existing estate.
Thomas said development spending was likely to fall to around £70m to £75m in 2003/4, with 30 new openings. He said the firm would still look to make small acquisitions, but he ruled out any bid for SFI or Yates Group.
He added that the company was carrying out a change in its management structure would, in the long term, give more in-depth control, but in the short term it was taking time to settle down.
Greg Feehely, an analyst at the City firm Old Mutual, said putting more money into refurbishments would inevitably mean outlets having to be closed for work to take place, "and thus lost trade, initially". In addition, he said, the level of discounts in the High Street, particularly on PPSs, meant price cuts would also hit takings he said Old Mutual was cutting is estimate of Luminar's profits for the year to February 2003 by 7.3% from around £79.8m to around £74.0m.
Greg Johnson, an industry analyst at ING Financial Markets, said he was particularly concerned that UK licensing reforms, which allow pubs to stay open for longer, could increase competition for nightclub operators.
Yesterday Luminar announced pre-tax profits up 14% to £33.7m in the six months to September 1, broadly in line with expectations.
The Financial Times commented that the company is probably suffering no more than others, and said Luminar is better placed to survive tough times: "Gearing is below 50%, there is a large tranche of freehold property on the balance sheet, and the forward multiple is an undemanding 9. In addition, Christmas falls on a Wednesday this year, and New Year's Eve on a Tuesday - it doesn't get much better than that for late-night operators."
Luminar has 304 outlets in total, including the Chicago Rock Cafe and Jumpin' Jaks chains, and a 12% share of the late-night market.
