Companies: REG   

Following an unconvincing 12 months to June for bar and comedy club group Regent, the new financial year has brought little in the way of recuperation so far.

Although total sales in the year to June rose 16.7% to £148.9m, a 41-week contribution of £24.5m from the acquired Old Orleans bar and restaurant chain masks a 2.5% revenue drift in the existing business.

The trading recovery at the Orleans estate was slower than originally expected, though a refurbishment campaign is underway. However, this was six months overdue as the company’s purchase of the leases of these sites was delayed by landlords waiting for the result of a relevant court case.

Of the ten Orleans bars already redeveloped – with new décor, drinks and menus – chief executive Bob Ivell says the largest two have produced sales growth in excess of 55%. The majority, meanwhile, are providing an increase of less than 20%. Ivell plans to spend £4m to £5m this year on ten further restaurants, leaving one third of the estate remaining, though he suggests ‘we might go faster’.

At the Walkabout chain, the surprising performance of England’s rugby team in the world cup led to a bumper couple of weekends, but current trading across the group is rather feeble, with like-for-like sales down 1% in the first 14 weeks of the new financial year.

Broker Numis expects profits of £10.5m and earnings of 6p for 2008, resulting in a price to earnings ratio of 11.8. With delays, disappointments and weak trading, there is a lack of market confidence in the shares and GCI is equally wary. We recommended avoiding at 101p in February and are still of the same mind.

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