Bars chain Yates boosted by successful makeover
Thursday 18 March 2004
Yates, the bars group that is overhauling its outdated faux-Victoriana image, yesterday revealed further evidence that its turnaround strategy was working with a rise in underlying group sales.
The company, which is catapulting its core Yates's estate into the 21st century with a dramatic makeover, said group like-for-like sales rose 2.6 per cent in the 10 weeks to 14 March, accelerating from a 0.2 per cent rise over Christmas. Its 98 new look Yates's bars also improved faster than before, with underlying sales 5.3 per cent stronger.
Analysts were split over whether to toast yesterday's trading update as marking a new start for the company. Andrew Saunders, at Numis Securities, said the sales increase "suggested a new momentum has returned to the business.... We believe the latest data shows the company has turned the corner."
But Arbuthnot's Alan Millar disagreed, saying: "The outlook for high street bars operators still looks challenging and Yates still looks likely to be a victim."
Yates's shares, which have doubled in the past 12 months, rose 3.5p to 102.5p.
Mark Jones, who has overseen the recovery since joining as chief executive 18 months ago, said the "suicidal promotions" that the industry had to resort to last year to attract customers had died down, although Sunday to Thursday was still tough.
Yates said the rise in sales meant its preliminary pre-tax profits before exceptionals would be at the "top end of our expectations". Mr Saunders, who predicted that the shares were due a re-rating, is forecasting profits before tax of £10.3m.
The group said it would take a £500,000 hit to cover its decision to outsource its warehousing and to axe about one in five of its 130 jobs at its head office. The move is expected to save an annualised £500,000, starting from its next financial year. The charge is in addition to a £5.9m exceptional cost to cover an anticipated loss on the 11 underperforming sites that it is seeking to sell. Of the 11 units - none of which was suitable to be converted to its new-look format - the company said it had sold three and was close to selling another three.
Group like-for-like sales for the year to 14 March fell 2.8 per cent, with the 15 remaining old-look Yates's behind the slide: their underlying sales were 3.9 per cent lower against a 1.7 per cent increase for the year at the refurbished sites. Its food-driven Ha!Ha! Bar & Canteen chain, which is being rolled out across the country, fared better, with like-for-like sales up 3.7 per cent.
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