Inventive suffers a hangover as students stay away

Inventive Leisure became the latest high street bar operator to warn that cash-conscious consumers are staying at home as it issued a profit warning yesterday. The group behind the Revolution vodka-bar brand said profits would be "significantly behind market expectations". Its shares slumped 21 per cent, or 25p, to 96p.

The company, a favourite with students, had hoped trading would improve once university terms began. It suffered over the summer as the hot weather put people off going to anywhere but a pub garden, with like-for-like sales falling 8.5 per cent. Yesterday it admitted underlying sales "remained down by a similar percentage" as students stayed away.

Analysts rushed to cut their profit forecasts, with Inventive's house broker, Panmure, slashing its full-year target by 17 per cent to £4m. Numis Securities cut its forecast by the same amount, saying some of the group's newer sites must be seeing "significant double-digit declines" to explain the sales shortfall. "With a further eight new sites still expected to open, trading progress must be assumed to have taken a significant setback for the management to be signalling such a large drop in profits relative to expectations at this early stage of the financial year," it added.

Inventive, which owns 39 bars, said its profit warning came despite cutting its head office cost base and improving its beverage margin through better buying. The company said it would look at its worst performing outlets and launch marketing campaigns to bolster sales across the estate. It is also slashing costs across the group.

Roy Ellis, the chief executive, said: "Our balance sheet is strong and we continue to be highly cash generative. I am confident that ... as market conditions improve we will be strongly placed to extract maximum benefit."

Inventive's problems follow months of woe at Luminar, the nightclubs group. They reflect the scale of competition across the high street, which has forced companies such as Po Na Na into administration. Analysts had hoped Inventive would escape the fate of its peers because its offering was distinctive: an unrivalled choice of flavoured vodkas.

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