Leisure group XP Factory, the owner of the Boom Battle Bar and Escape Hunt chains, has issued a stark warning that it will miss its sales and profit targets for the current financial year. The company, which specialises in experiential entertainment such as axe-throwing and escape rooms, is facing significant headwinds from challenging market conditions and a notable downturn in consumer spending.
Market Pressures Impact Boom Battle Bar Performance
In a trading update released on Monday, XP Factory revealed that its Boom Battle Bar brand has been particularly hard hit by market pressures. The brand, which offers activities like augmented reality darts, Bavarian axe throwing, and "crazier golf," experienced a decline in like-for-like sales over the festive period and into early 2026. This drop was attributed to weak consumer spending in recent months, which has persisted despite the company's efforts to offset losses through new venue openings.
Overall, sales across XP Factory's owned and operated Boom sites grew by a modest 2.5% in the 13 weeks leading up to December 28. However, this figure masks a concerning 7.2% decline in like-for-like sales compared to the same period the previous year. The company noted that strong corporate bookings were insufficient to compensate for the sharp fall in consumer sales, highlighting the broader economic pressures facing the leisure sector.
Escape Hunt Chain Shows Resilience Amid Challenges
In contrast to the struggles of the Boom Battle Bar brand, XP Factory's Escape Hunt chain demonstrated more robust performance. The escape room venues saw total sales increase by 10% over the same period, with like-for-like growth of 6.4%. This positive performance was bolstered by new openings in Canterbury, Kent, and Sheffield, South Yorkshire, indicating continued demand for immersive entertainment experiences.
Despite this resilience, XP Factory has announced plans to moderate the pace of its new site openings across both brands. The decision reflects the uncertainty caused by ongoing market conditions and a desire to manage expansion more cautiously. Nevertheless, the group remains optimistic about the long-term potential of the Escape Hunt business, aiming to grow it to around 100 venues across the UK, albeit at a slower rate than previously anticipated.
Financial Outlook and Cost Pressures
XP Factory expects revenues and earnings to fall short of targets for the current financial year, with earnings before interest, tax, depreciation, and amortisation projected to be between £5 million and £6 million. The company cited weaker consumer confidence as a primary driver of this shortfall, compounded by increased operational costs.
Specifically, XP Factory has been impacted by rises in the national living wage and national insurance contributions implemented last year. The company acknowledged that it has not been able to fully mitigate the impact of these higher costs due to the prevailing consumer weakness, which has limited its ability to pass on expenses to customers without further dampening demand.
Leadership Comments and Market Reaction
Richard Harpham, chief executive of XP Factory, commented on the situation, stating, "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. 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."
The market reaction to the profit warning was swift and severe. Shares in XP Factory plummeted by 16.6% in early trading on Monday, falling to 11.68p. This sharp decline underscores investor concerns about the company's near-term prospects and the broader challenges facing the leisure industry amid economic uncertainty.
As XP Factory navigates these turbulent conditions, the focus will be on balancing expansion with financial prudence, while hoping for a recovery in consumer confidence to revive fortunes in its flagship Boom Battle Bar venues.
