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  • Writer's pictureMark Watson-Mitchell

Nightcap – increased cheer at this bars group

Despite pressures from bad weather, train strikes and the like it was apparent that the customers of the Nightcap (LON:NGHT) bars continued to increase its cheer.

The thirteen weeks leading up to and just after the Christmas festivities saw the portfolio of 36 cocktail and late-night bars across the country report a 60.9% increase in revenues.

Expansion through a programme of organic growth aided by new strategic openings has been impressive.

Revenues for the 26 weeks to 1 January 2023 were £23.2m (£15.9m), the improvement clearly showing that the Nightcap group bars have proved popular with its target customers.

CEO Sarah Willingham stated that:

"To achieve quarterly growth of 60.9% in revenue and 4.7% growth on a like-for-like basis represents a monumental effort, not least during a time when rail unions deliberately chose a number of the biggest most important weeks and weekends for hospitality, for their series of significant rail strikes, including the incredibly important Christmas weeks.

During the first half of our current financial year we also successfully opened another six phenomenal bars across the country, while also delivering record-breaking amounts of corporate Christmas parties and a New Year’s Eve which was sold out across most of our 36 sites.

This result is a testament to the resilience of our high disposable income Millennial and Gen Z customers, who continue to enjoy social interactions in a fun party atmosphere in our bars across the country."

Second Half confidence

Looking forward to the second half of the financial year, the group’s Board has confidence that, in the absence of further rail strikes or other major interruptions, the group will trade in line with management's expectations.

Analyst Opinion

Matt Butlin at the group’s brokers Allenby Capital currently has estimates out for the year to end June 2023 for takings rising to £49.3m (£35.9m), with adjusted EBITDA of £3.67m (£3.31m), pre-tax profits of £399,000 (£24,000), taking earnings up to 0.55p (0.23p) per share.

For the coming year his figures suggest an increase in takings to £58.0m, EBITDA £5.0m, a leap in profits to £1.67m, with earnings almost doubling to 1.04p per share.

Conclusion – looking for price recovery

The shares of this £18.1m capitalised bars group offer significant price recovery prospects.

Since the group’s IPO in early 2021 they have been up to 35.5p and have subsequently been down to 6.5p.

Now at just 8p they have good upside potential as the group pushes forward into 2023.

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