“When it rains it pours and just as he looks to get Patisserie Valerie back on track after last year’s accounting scandal Luke Johnson is now facing a nasty loss on the shares he owns in Brighton Pier plc,” says Russ Mould, AJ Bell Investment Director.
“The company, where Mr Johnson is both the chairman and the largest shareholder, has today issued a profit warning. Its shares have plunged by 42% as a result in early trading to the lowest level seen since the firm acquired Brighton’s iconic Palace Pier and was readmitted to AIM in April 2016, after a name change from Eclectic Bar.
“According to the latest annual report and accounts Mr Johnson owns 8.4 million Brighton Pier shares for a 23.7% stake, which has lost some £2.2 million in value during today’s early exchanges.
“The plunge to 36.5p also leaves Mr. Johnson with a tricky decision to make as he holds a warrant to subscribe to 1.6 million new shares which lapses on 30 June of this year. The exercise price is 60p, some way above where the shares now trade.
Source: Refinitiv data
“The company’s golf division continues to trade well but its 12 bars, which include concepts such as Po Na Na, Fez Club and Coalition, have undershot expectations. This has compounded disappointing footfall at Brighton Pier, which the firm blames on a disappointing weekend’s weather at the August Bank Holiday and – more damagingly – ongoing railway engineering work on the line between London and the South Coast. That has prevented the firm from fully reaping the benefits of a £1.3 million refurbishment of the Palace Pier’s bars and restaurants.
“The track between Three Bridges and Brighton will see further closures this spring, including the entire week of the February school-half term and several weekends stretching into May, when the company would normally be looking forward to peak-season trading levels.
“No doubt Mr Johnson and his fellow board members and shareholders will be hoping that the work finishes on time, although the chances of two stunning British summers in a row must be even lower, after 2018’s heat wave in June and July.”