XP Factory, the parent company of experiential leisure brands including Boom Battle Bar and Escape Hunt, has issued a stark warning about its financial performance, revealing plans to significantly slow its expansion strategy amid challenging market conditions.
Shares Tumble as Sales Targets Missed
The London-based leisure group saw its shares plummet by 16.6 percent to 11.68p in early trading on Monday following the announcement. The company stated that weaker consumer confidence means it now expects both revenues and earnings to fall short of targets for the current financial year.
Earnings before interest, tax, depreciation and amortisation (EBITDA) are now projected to be between £5 million and £6 million, significantly below previous expectations. The firm cited "challenging" market conditions as the primary driver behind this downward revision.
Boom Battle Bar Particularly Impacted
The Boom Battle Bar brand, known for its innovative activities including augmented reality darts and Bavarian axe throwing, has been especially hard hit by the current economic pressures. Despite a 2.5 percent rise in overall sales at owned and operated Boom sites, this was overshadowed by a concerning 7.2 percent like-for-like sales drop in the crucial 13-week period to 28 December compared to the previous year.
This decline occurred during what is traditionally the busiest festive period for leisure venues, with new openings providing only partial offset to the underlying weakness in consumer spending. Even strong corporate bookings proved insufficient to counter the broader decline in discretionary consumer expenditure.
Expansion Plans Scaled Back
In response to these market pressures, XP Factory has announced it will be "moderating" the pace of new site openings across its portfolio. The company revealed specific plans to scale back new venue launches for its Boom Battle Bar brand as consumer spending remains persistently weak.
Richard Harpham, chief executive of XP Factory, commented on the situation: "Against a backdrop of well-documented industry challenges, we have continued to outperform the wider experiential leisure market and make progress against our strategic objectives."
He added: "While near-term trading within Boom has been impacted by market pressures, with strong market positions and a compelling UK growth runway, we remain well positioned to emerge as a long-term winner as the sector continues to consolidate."
Escape Hunt Shows Resilience
In contrast to the struggles at Boom Battle Bar, XP Factory's Escape Hunt venues demonstrated more resilience in the challenging market. Total sales for the escape room business increased by 10 percent, with like-for-like growth reaching 6.4 percent, benefiting from strategic new openings in locations including Canterbury, Kent and Sheffield, South Yorkshire.
The company maintains its belief that it can still grow the Escape Hunt business to approximately 100 venues across the United Kingdom, despite the decision to slow the pace of new openings across the group.
Cost Pressures Compound Challenges
XP Factory highlighted additional financial pressures that have contributed to its current situation. The company noted it has been impacted by increases to both the national living wage and national insurance contributions implemented last year.
Critically, the firm stated it has not been able to "fully mitigate" the impact of these higher operational costs due to the concurrent weakness in consumer spending, creating a challenging squeeze on profitability.
The announcement represents a significant shift in strategy for one of the UK's prominent experiential leisure operators, reflecting broader economic pressures affecting discretionary spending across the hospitality and entertainment sectors.
