Join our community of smart investors

Recovery in sight for Revolution Bars

Shares in Revolution Bars have begun to recover after a dramatic fall in May
July 26, 2017

Revolution Bars (RBG) appears to be on the mend after its profit warning in May sent shares down more than 40 per cent. The company announced in a pre-close trading update that total sales in the year to July were up 9 per cent to £130m, while like-for-like sales were up 1.5 per cent. Terrorist attacks in Manchester and London impacted sales during the final quarter, but growth during the past six weeks has recovered to 2.7 per cent. Six new bars were opened during the year with average weekly sales ahead of management’s expectations. This reassuring news sent shares up nearly 12 per cent.

IC TIP: Buy at 129p

Costs were one of the main issues in May’s profit warning. The living wage, the double increase to the minimum wage, the apprenticeship levy, and above-inflation increases to business rates ended up being more of a headwind than previously expected. The group has now reviewed its accounting so that depreciation charges should reduce by around £1m in the 2016 financial year, but there will be an offsetting impact in higher operating costs.