Loungers to shrug off dining sector malaise and post rocketing sales

Investors are expected to cheer Loungers’ latest six-month figures as the cafe-bar operator looks to continue its rocketing growth.

The dining firm has shrugged off malaise in the wider restaurant industry to consistently post higher sales and profits.

Nevertheless, the company, which trades from independently named Lounges and the Cosy Club chain, is expected to reveal a slight slowdown in its rapid sales growth when it announces its results for the first six months of the financial year in an update on Wednesday.

Loungers, which only floated on the London stock exchange in April, said last month that it expected to deliver 22% revenue growth to £79.8 million in total sales for the 24-week period to October 6.

It said this would be driven by 5.4% like-for-like growth, while it has also pushed forward with an ambitious expansion plan.

Loungers said it is on track to open 25 new sites in the current financial year, stating in October that its pipeline looked “strong”.

Peel Hunt analyst Douglas Jack said he expects the company push forward with organic growth over the rest of the year, but said Loungers could see a slight slowdown.

The analyst said that rivals have “failed to replicate” Loungers’ unique all-day trading model, forecasting that it will post 3.6% like-for-like growth for the current full year.

He added that the business has posted like-for-like sales which are “consistently ahead of our forecasts” as well as “high returns”.

Following its trading update last month, Liberum’s leisure analyst Anna Barnfather said momentum has continued at the business, with 157 sites now trading.

She added that the restaurant group’s recent openings performed “well” and it had a confident outlook for the rest of the year “with a new menu, updated drinks range and better supplier terms setting the stage for further progress”.

Loungers was founded in 2002 and saw operating profits jump by 40% to £9.7 million in its last full-year figures.