Luminar reports 20.2% sales decline

Luminar, the embattled nightclub operator, confirmed this morning that it was continuing to see a "difficult trading environment" as it reported a like-for-like sales decline of 20.2%.

Unveiling its interim results for the 26 weeks to 26 August 2010 it said it had started to 2011 in the same vein as it ended 2010 and this was "primarily derived from fewer customer admissions".

However, it did report an improvement in like-for-like sales decline of -16.9% for the seven weeks to 14 October - a change that was probably driven by new university students.

It also revealed that it had obtained a credit approved term sheet for a new three year facility, after passing a banking covenant test in August.

It said admission revenue had fell by 26.5% on footfall down by 19.1%, while drinks revenue was down by 18.1%.

Overall sales in the continuing business for the period totaled £68.2m, a reduction of 20.8% on the previous year.

Earnings before interest, tax, depreciation and amortisation fell to £68.2m, a decline of more than 20% on the year before.

Simon Douglas, chief executive, said: "The difficult trading environment experienced during the second half of the last financial year continued into the first half of this year.

"Despite this, we continued to generate cash and reduce net debt.

"We now have a clear picture of the strategy we believe is appropriate to reverse the downward trend.

"Management actions are showing encouraging signs of driving footfall and volume.

"The board believes that the group is now on the right path, although at the very beginning, of returning value to Luminar's shareholders."

Insight: By The PMA Team

Simon Douglas, who took over as chief executive at Luminar at the start of 2011, has unveiled his new strategy for the company.

The strategy is based on extensive research of its customer base. It's surveyed 750 18-30-year-olds and conducted six 90-minute focus groups around the country.

"There wasn't a lot of research available (when I joined the company," he says.

Douglas believes that the company has not been sufficiently attuned to the music taste of its customers, and not been offering the premium ranges - it's introduced Corona, Red Bull and WKD - and promotions they are looking for. Customer have also asked for more toilets and seating.

The company has introduced a brand new Fuzzy Logic student night which has seen 13.5% growth in admissions compared to a year ago.

There's also a greater emphasis on live music with Calvin Harris and Basshunter completing tours.

Douglas believes that the 20% drop in sales at Luminar's 76 clubs is caused by three issues - the recession, structural changes to the marketplace and propositional issues - in roughly equal one-third measures.

In other words, one-third of the sales declines are down to customers choosing to frequent other establishments on the circuit because the Luminar "proposition" hasn't been right.

The next Luminar opening, Project in Norwich, funded by insurance money, will offer a karaoke room and incorporate areas that are designed to be used for live performances - it's planned as a complete night out for customers.

Refurbishments at Hanley, Peterborough and Windsor are to follow. Douglas says he has personally visited about 60% of the club's 76 nightclubs so far. "The infrastructure of the business is in great shape," he says.