Cost savings and other initiatives are set to bring benefits for Eclectic Bar Group after it confirmed a loss and a fall in earnings for the past year.
It today reported a loss of £5.8m for the 12 months to June 28, including impairment of fixed assets and goodwill of £4m. Revenues were flat at £22.3m while earnings (EBITDA) on continuing operations fell 30% to £1.8m.
The results were in line with expectations after the bar and club operator issued a profits warning in November last year. Since then, trading has continued to be “challenging” despite management taking immediate action across the business.
In June, leading hospitality entrepreneur Luke Johnson invested in the business, taking on the unpaid role of executive chairman, to work with the board to turn the company around.
Chief executive Reuben Harley and chief financial officer John Smith also invested by subscribing to new shares which, with Luke Johnson’s investment, will raise £1.65m and provide extra working capital. Minor investment, funded from cash flow, will continue across the estate to maintain standards.
The board today reported that the business remained cash generative and that investments in a number of venues had delivered improved performance, adding that further benefit of the cost savings would be achieved over the coming months.
Future growth is likely to be achieved through acquisition and development of small groups of trading sites with a focus on delivering greater food revenue.
Luke said: “Much progress has been made in re-aligning the group for today’s marketplace. Eclectic is fundamentally a good company with a robust business model. It has much potential including some great people and an attractive portfolio of sites.
“It has firm foundations and continues to be cash generative. The future opportunity is to build on these strengths and take advantage of the opportunities which exist in the market to diversify into more food-led operations and grow the business through acquisition and market consolidation.”
The group, which has 19 bars and clubs, said it had faced challenges from issues such as the change in behaviour of students, intense competition in a number of the group’s key trading towns and disappointing performance of its bars Lola Lo in Derby and Dirty Blonde in Brighton (pictured).
It has responded by reducing costs at head office, closing non-profitable nights, focusing on development of its food offering and rationalising its estate.
Given the risks associated with new developments, it has decided not to revamp the recently acquired Sheffield and Liverpool sites into its tiki bar concept Lola Lo but to seek to dispose of them both over the next 12 to 24 months.
As well as Lola Lo, Eclectic trades with a variety of brands, including Embargo Republica, Lowlander, Sakura, Po Na Na and Fez Club.