The leisure industry may have rebounded in impressive form since the end of the recession, but certain sectors within it continue to struggle. This primarily concerns pubs and nightclubs, as the price of alcohol remains a deterrent for consumers with low disposable income despite the concessions made within the Chancellor’s latest Budget.
As a result, Tiger Tiger nightclub chain owner Novus Leisure was forced to post a 3.1 per cent fall in like for like sales for the year to June 30th. In part the operator, owned jointly by private equity group LGV Capital and Hutton Collins, blames the fall in sales to a drop experienced during the Olympic Games in the summer of 2012.
Although sales amounted to a total of £116 million, a loss on ordinary activities before taxation of £40 million has set alarm bells ringing for executives. In response, Novus Leisure will now invest £20 million into the refurbishment of its commercial property portfolio, intending to update all its UK sites over the next two years.
In a statement, the company said; “There has been much change at Novus both during the year to June 2013 and following the year end.
“The statutory accounts of Novus to June 2013 recognise these changes and a difficult trading period for the company.
“There is now a totally new management team in place that has restructured the business and has begun implementing a strategy for growth through investment in the prime sites that the business operates – the investment strategy for the business will see circa £20 million invested in the group’s sites over the next 2 years.”
Novus Leisure was purchased by the current owners in July 2012 for £100 million, with an impressive commercial property portfolio including 17 previous Balls Brothers bars which were purchased in 2011 after the rival chain entered administration. Since then, the business has undergone several radical changes as referred to in the statement, with the most significant being the replacement of long standing chief executive Steve Richards for former TGI Friday’s chief executive Tim Cullum.
The story here is one which has been seen numerous times since the start of the recession, although fortunately the issue is not yet so severe that the group has been forced to issue profit warnings or enter administration. Yet for others, with Punch Taverns being the most recent example, it may be that even the drop of one pence in beer tax and a freezing of spirit taxes may not be enough to keep the wolves from the door.
Perhaps, instead of large scale refurbishments, Novus Leisure should be examining whether their investment could be put to better use channelled into a cost saving measure to encourage consumers to patronise its clubs once more. This strategy, which has so far proven popular with supermarkets, could potentially be the saving grace for Britain’s network of ailing pubs and nightclubs.
Do you think a refurbishment of the group’s outlets will be enough to trigger an improved performance?
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