Shares tumble at nightclub operator
Shares in the company behind a popular Ipswich night spot have plummeted in value after it warned that business was being badly hit by rising unemployment among younger people.
IPSWICH: Shares in the company behind a popular Ipswich night spot have plummeted in value after it warned that business was being badly hit by rising unemployment among younger people.
Luminar, the UK's biggest nightclub operator which includes the Liquid and Envy complex on Cardinal Park, said its sales fell by 5.9per cent in the six months to August 27, with a further decline in trading seen during September.
The company blamed the downturn on the rising level of unemployment in its core market, with the jobless rate among 18 to 24 year olds currently standing at around one in six and closing in on the all-time high of 17.8pc set in March 1993 in the wake of the 1990s recession.
But Luminar, whose nightclub brands also include Oceana and Lava & Ignite, is now attempting to broaden its appeal to target a slightly older age range.
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The slump in sales for the six months to the end of August was driven by a 6.6pc fall in drinks revenues, while footfall was down by 2.9pc and admission revenues were 0.2pc off.
Luminar said that while competitors were driving business through discounted alcohol prices, including “all you can drink offers”, it would stick by its offering of “higher quality content” in a bid to drive greater spend per customer.
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However, it warned there was a significant risk that it will not meet City profit expectations for the year to February 25, with much depending on trading over the Christmas period.
Shares in Luminar fell sharply following the warning, from 130p to below 87p before rallying slightly.
Analyst James Cooke added: “Nightclubs have very high fixed cost bases and need a high level of admissions to generate profitability.”
The timing of Christmas was also likely to put pressure on the company, he added. “With Christmas Day itself falling on a Friday, the group loses the second busiest trading night of the week.
“It's a similar story for the New Year, with New Year's Day falling on a Friday when few brave souls will venture out,” said Mr Cooke.