Hangover for Luminar as cash-strapped revellers shun nightclubs

Young people are increasingly staying away from pricey nightclubs in the wake of the economic downturn, forcing venue operator Luminar to issue its latest profit warning.

The group, which owns the Oceana and Liquid clubs, revealed that like-for-like sales in the 18 weeks to 2 July had fallen 12 per cent. It blamed the economic woes facing 18- to 24-year-olds as well as a highly competitive marketplace for the latest in a series of profit warnings over the past two years.

With a somewhat confusing turn of phrase, the company said it had seen a "slightly lower than anticipated reduction in the decline of sales".

Luminar is attempting to battle against the slide. Seven of its venues now have Jongleurs comedy evenings, which have proved popular, with a further five in the pipeline.

It has also opened five WooWoo Bars near existing clubs, with four more on the way to boost profits. It has also been forced to target other age groups outside its core youth market.

Signs do not look good, according to Panmure Gordon's analyst James Cooke. He said the update was "worse than anticipated" and he cut earnings forecasts from £21.9m to £16.9m. "With net debt of around £80m and a tax liability of about £43m, there appears to be little equity value left for shareholders." The shares fell 1.81 per cent to 6.5p.

The group remains in talk with its bankers to restructure its debts.