Luminar slides as clubbers stay home for Christmas

Luminar, the UK's biggest nightclub operator, saw its market value plunge by £38m yesterday as it revealed it had been hit by a worse than expected Christmas, with clubbers staying at home or going to rival venues offering a night out at a big discount.

Luminar, the UK's biggest nightclub operator, saw its market value plunge by £38m yesterday as it revealed it had been hit by a worse than expected Christmas, with clubbers staying at home or going to rival venues offering a night out at a big discount.

Joining the ranks of retailers, pub operators and other leisure companies that have suffered from weak trading over the crucial Christmas and new year period, Luminar said a 4.2 per cent decline in like-for-like sales in the five weeks to 5 January had pulled down comparable sales for the year so far by 1.7 per cent.

As a result operating margins for the full year to the end of February were likely to show a 2.9 per cent decline.

Luminar – whose stable of 300 clubs around the country includes the Chicago Rock, Jumpin Jacks and Liquid brands – said there had been a decline in the so-called footfall at its older, underperforming venues caused by both weaker consumer spending and discounting by high street competitors.

The profits warning comes only four weeks after Luminar's chief executive, Steve Thomas, appeared to play down talk of the group being hit by poor trading. It sent the shares – which have plummeted over the past eight months from a high of 937p – on a new journey downwards yesterday. Last night they closed 52.5p, or 15 per cent, lower at 290p, valuing the company at just under £212m.

Analysts, who said a downturn in trade had been worse than expected, rushed to cut their forecasts for both the current and the coming financial year. Greg Freehely of Old Mutual Securities now expects earnings per share to be 12 per cent lower this year and, assuming there is no pick-up in trade in the coming months, to be 18 per cent down for the year to February 2004. "The rate of decline and the fact that there is no end in sight is the real surprise," Mr Freehely said.

The group is planning to dispose of up to 23 poorly performing clubs and said that it would slash capital spending in the next year by £20m to £55m. Although its development programme is being cut, it said it would put a further £30m into refurbishing those units that could be revived.

Mr Thomas insisted the company had a strong enough balance sheet and the scale to survive the downturn in the market. "We are confident that we are well placed to withstand these short-term market pressures, will emerge as a stronger business and will benefit from the recovery when it materialises," he said.