Nightclub chain Luminar hit by youngsters staying at home
Oct 23 2009 by Anna Blackaby, Birmingham Post
The nightclub chain which owns the Jam House and Oceana has seen earnings slump as high levels of youth unemployment force young clubbers to stay at home.
But the Jam House in Birmingham’s Jewellery Quarter put in a consistent performance last year helped by its diverse audience age range and a wide-ranging offering which covers food, drink and music.
Luminar, the UK’s biggest nightclub operator, said underlying pretax profits in the six months to August 27 plunged to £4.9 million from £8.4 million a year earlier as like-for-like sales dived 4.5 per cent.
And it warned that trading in its new financial year has worsened further, with same outlet sales plummeting 14 per cent and admissions sank 16.6 per cent in the seven weeks to October 15, a period in which youth unemployment edged towards the one million mark. The company had previously weathered the recession relatively well, with young mortgage free consumers among those still spending during the early stages of the downturn.
Despite the drop in the national group’s results, Jam House brand manager John Bunce said the Jewellery Quarter venue was on “an even keel”.
He said there had been a marked difference between what he called the venue’s public business, which covers its live music events and Thursday to Saturday nights, and its corporate hospitality businesses, which serves recession-hit firms in the nearby Colmore Row district and in sectors such as construction.
Mr Bunce said: “The public business is actually stronger in 2009 than it was in 2008 – our local support is stronger now than it was last year.
“However, our corporate business has seen a distinct downturn – probably ten or 15 per cent – but this has been offset by our public trading which has increased by five or six per cent. So taking it all together we are on an even keel.”
On a national level, Luminar’s grim update comes a month after the firm, which operates 88 sites, issued a profit warning, saying youth unemployment had weighed down on its performance.
Luminar said: “Some 18 per cent of 18-24 year olds are now unemployed and many more are students, or on low incomes.
“Whilst our customers undoubtedly value the high energy experience of a Luminar nightclub, they are more economically constrained in their leisure activities, as our lower admission numbers demonstrate.”
Alongside the tough conditions, the company was also hit with a £9.9 million write-down on its 49 per cent investment in Jumpin’ Jacks bar operator 3D Entertainment.
Luminar has launched an action plan to deal with the downturn, including a crackdown on costs.
Stephen Thomas, chief executive, said: “Whilst our market is currently very tough we continue to have a clear operational focus.
“This together with very tight cost control and significant financial strength will ensure that Luminar maintains its market leading position and prospers when our marketplace recovers.”
The firm said it has prepared well for the crucial Christmas trading period but warned of the negative impact of Christmas Day falling on a Friday.
