Loungers (LGRS:AIM) 257.8p

Loss to date: 7.4%

Original entry point: Buy at 278.5p, 23 December 2021

Rising inflation and interest rates have dampened investor sentiment towards consumer facing businesses.

But we believe the company remains well positioned to continue its growth trajectory against a less rosy economic backdrop. A recent (26 Apr) trading update confirmed momentum in the business.

The company said it has continued to trade strongly despite ‘subdued’ trading over Christmas due to the impact from the Omicron variant.

Loungers has maintained its significant outperformance of the market over the 48 weeks to 17 April 2022 with like-for-like sales 22.1% ahead year-on-year.

This pushed revenue to a record £237.3 million, around 5% higher than analysts had pencilled in and 42% above pre-pandemic levels.

The strong performance prompted the company to guide for full-year profit to be ahead of market expectations.

Growth was driven by the opening of 27 new sites including one Cosy Club taking the portfolio to 195 locations. Meanwhile net debt reduced from £44.9 million to £2.6 million.

Although investors must wait for more financial details at the full year results on 13 July, it is encouraging to see profit moving higher.

SHARES SAYS: Still a buy.

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