Bar chain drops £40m as wages prove a headache
COCKTAIL bar group Revolution is likely to be nursing a nasty hangover after its shares dived to an all-time low yesterday.
The Ashton-under-Lyne-based group saw £40.9m wiped off its value after it admitted to being caught out by unexpectedly high staff costs this year.
It complained about ‘well-publicised cost headwinds’ such as a double increase to the minimum wage, a new apprenticeship levy, and an above-inflation increase in business taxes.
The group also said the five Revolucion De Cubas rum bars it has opened in the past year are taking longer to make a profit than originally anticipated.
Despite this, it still plans to open six bars in the next financial year.
Investors may consider reigning in hopes of making profit any time soon, as the company now expects performance to be broadly flat in 2017. The vast drop in Revolution’s value even led analysts to suggest it could become vulnerable to a takeover bid from a private equity firm or rival. Shares fell 40.1pc, or 81.75p, to 122.25p.
The FTSE 100 returned to positive territory, rising 0.5pc, or 34.29 points, to 7470.71.
Housebuilders rallied following Theresa May’s pledge to build 1.5m homes by 2022 if the Conservatives are elected in next month’s general election. Persimmon rose 0.4pc, or 9p, to
2431p, while Bovis rose 0.3pc, or 3p, to 917.5p, and Galliford Try jumped 0.7pc, or 9p, to 1272p.
Burberry’s chief operating and financial officer Julie Brown capped off an encouraging week for the luxury clothing brand’s investors by buying £166,000 worth of its shares. Brown, 55, bought just over 9,600 shares at 1724.9p each. The news will be music to the ears of Burberry’s investors, who will already be enthused by its encouraging results earlier this week. Despite profits plunging by a fifth, the luxury retailer said the weak pound helped to drive ‘exceptional’ UK performance.
Its turnaround is expected to continue under chief executive and former Celine boss Marco Gobbetti, who takes over in July.
Despite shares falling 0.2pc, or 4p, to 1714p by the close yesterday, they are up 3.6pc for the week.
Holiday company Thomas Cook was among the FTSE250’s biggest losers after Barclays’ analysts downgraded it to ‘equal weight’ from ‘overweight’.
The broker said that although Thomas Cook is doing all the right things, it remains concerned by the challenging market and the UK consumer’s reluctance to spend on holidays. In its results earlier this week, Thomas Cook said competition between travel agents has slowed growth in its sector. This echoed claims made by rival Tui. Shares fell 2.9pc, or 2.75p, to 92.45p.
Magazine firm Future had a great session after reporting a 375pc rise in profits for the six months ended March 31. The firm publishes titles such as Official PlayStation, PC Gamer and Total Film. It made £3.8m, up from £0.8m in the same period the year before, while revenues rose 35pc to £40.9m.
This was driven by launches and the positive impact of its acquisition of heavy metal music publication Team Rock in January 2017. It has also seen increased interest in its ‘bookazines’, which are books written and laid out in the style of a magazine. Trading in the second half is expected to be slightly ahead of expectations. Shares rose 15pc, or 27.12p, to 207p.
Metal miner Nyota Minerals soared by more than 30pc after asking to be suspended from the Australian stock market to focus on its UK listing. Shares advanced 33.3pc, or 0.03p, to 0.1p.