Soho House owner shows ‘robust recovery’ but lockdown fears remain

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Soho House Ltd updates

Soho House owner Membership Collective Group has reported a “robust recovery” in its first results since a disappointing stock market debut that priced its shares at the lower end of its target.

Total revenues jumped 118 per cent to $124m in the quarter to July 4, the New York-listed group said on Thursday, compared with the same period last year when the majority of its private members’ clubs were closed. Net losses narrowed from $77.8m to $57.1m.

Nick Jones, MCG’s chief executive, said the waiting list for membership to Soho House, which counts the reality star Kendall Jenner and supermodel Kate Moss among its clients, had reached “record highs”. He added, however, that the group was taking “a cautious approach” to accepting new members in order to allow for coronavirus-related social distancing in its clubs and hotels.

Revenues from memberships stayed flat in the quarter at $45m compared with the same period in 2020 as a result of the slow intake of new applicants. The number of members who have frozen their accounts fell from 16,500 in the first quarter of 2021 to 10,800 at the end of the second quarter as clubs slowly reopened following lockdowns.

The group listed in New York in July, raising $402m to support its rapid expansion plans and pay down $98m worth of debt. Shares in the group rose 4.5 per cent in pre-market trading in New York on Thursday. They have fallen since the company’s stock market debut, pointing to concerns that MCG will ever turn a profit — something that it has not yet achieved in its 26-year history.

Steven Zaccone, an analyst at Citigroup, said that MCG had “a unique consumer growth story that combines a growing unit count, improving house-level economics, recurring membership revenue and significant margin expansion opportunity” but that its business was still at risk of lockdowns due to the spread of the Delta variant.

MCG opened two Soho House sites in London and Austin, Texas, during the quarter and is set to open clubs in Tel Aviv, Paris, Rome and Brighton this year. At present, it operates 30 “houses” in 12 countries.

Despite slowing growth of its core Soho House memberships, it has continued to add members to its other brands, which include the co-working business Soho Works and its interior decoration line Soho Home, adding 8,000 new members to these during the quarter.

It said occupancy at its Soho Works sites had increased to more than 80 per cent as pandemic restrictions began to relax.

“Near term, the exact timing and profile of the recovery is conditional on the progression of Covid-19 as well as associated restrictions,” the group warned.

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