Soho House, a membership club operator, has been experiencing financial losses since its founding in 1995. However, in a recent earnings call, CEO Andrew Carnie highlighted improvements in key metrics, leading to a 3% increase in the company’s share price. Membership at the company’s flagship clubs increased by 17% year-over-year to 198,000 members. Despite the growth in membership, the company still reported a loss of $46 million in the first quarter, with a rise in net debt to $664 million.
Executives at Soho House are focused on increasing in-house spending from members, particularly on food and other services. The company aims to enhance the overall experience at its properties and renovate key locations. In-house revenue was lower in the quarter, partly due to the trend of Dry January, where people abstain from alcohol consumption. This led to a decrease in alcohol sales, impacting the company’s earnings for the quarter.
The company’s board had been considering potential transactions such as selling the business or taking it private, but no further details were provided during the recent earnings call. Despite the ongoing financial losses, Soho House is seeing positive signs in its membership growth and revenue. Adjusted EBITDA for the quarter was $19.3 million, with the company ending March with $145 million in cash and cash equivalents.
Soho House is working on improving its in-house services and reducing overflow at its popular locations to enhance the overall member experience. While the company saw a decline in in-house revenue in the first quarter, there have been sequential improvements, which have led to greater confidence in the year ahead. The company also experienced its highest-ever increase in sales of non-alcoholic cocktails in January, but it was not enough to offset the losses from reduced alcohol sales.
Overall, Soho House’s financial performance has shown some positive signs in terms of membership growth and revenue, despite ongoing losses. The company is focusing on increasing in-house spending from members and improving the overall experience at its properties. While the company continues to struggle with financial losses, it remains optimistic about the future and is working towards enhancing its offerings to attract and retain members.
