Cost warnings from Revolution Bars prompt fall in share price

21-May-2017 - Last updated on 22-May-2017 at 11:56 GMT

Hitting hard: Revolution Bars has highlighted concerns about increasing labour and property costs

The share price for Revolution Bars fell sharply after leaders at the company highlighted concerns about increasing labour and property costs, it has been reported.

The company, which has 67 bars, claimed that the national living wage, rises in the national minimum wage, the new apprenticeship levy, and the above-inflation increase in general business rates had hit its business harder than expected, The Times newspaper reported.

Since the comments were made during an update on trading for the year, the firm’s shares have fallen by 40%, prompting The Times to speculate that a buyer “thirsty for a deal” might be tempted to make an offer.

‘Vulnerable to a bid’

Analysts have suggested that the sharp drop in share price, which fell by 81¾p to a new low of 122¼p, could make it “vulnerable to a bid by private equity or a rival”, particularly in light of the 200p share value just two years ago, The Times said.

Revolution Bars chief executive Mark McQuater said the fall in share price was “a bit of an overreaction”, adding “it doesn’t reflect the core strength of this business”. He said that the £2 an hour increase in the minimum wage for workers aged 21 had hit the business hard.

In an update on trading for the year to 1 July, Revolution said that its underlying earnings would be “broadly at the same level as last year”, despite like-for-like sales growing by 1.7% in the year to date.