Safestay (AIM:SSTY) on Monday announced year-to-date trading remains below the Board's original expectations, even as recent weeks have shown signs of improvement following operational initiatives from its newly appointed chief operating officer.
The AIM-listed pan-European hostel operator, whose interim results already flagged weaker summer trading, said cash flow remains under pressure during the seasonally quieter fourth and first quarters, a pattern it described as typical for the business.
Bank borrowings have fallen to £9.1m as of 23 October, down from £13.6m at 30 June, after the Group applied a substantial proportion of proceeds from the Glasgow property sale, together with a portion of the Holland Park disposal proceeds, toward debt reduction.
The Board is evaluating further measures to manage working capital through the winter and into 2027, including the potential disposal of additional properties and a review of existing financing arrangements, though it cautioned there is no certainty over the timing or outcome of any such steps.
"While trading has shown encouraging signs of improvement more recently and we have significantly reduced bank debt, the Board remains focused on ensuring the Group has sufficient liquidity to meet its obligations," said Paul Cummins, Executive Chairman.
Cummins, who took over as Executive Chairman earlier this month after Larry Lipman's retirement following more than 15 years in the role, added that the company is "actively pursuing a number of options, including further property disposals and a review of our financing arrangements".
The disposals feed into a wider deleveraging push: Safestay completed the £5.1m sale of its Glasgow Charing Cross freehold in the summer and the £3m sale of its London Kensington Holland Park leasehold in October, both aimed at repaying debt and strengthening the balance sheet.
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- 21/10/26Safestay chairman Larry Lipman retires after 15 years
- 08/10/26Safestay completes £3m Holland Park sale
- 04/06/26Safestay to close Berlin Kurfürstendamm hostel
Refurbishment work at the Brussels hostel is nearing completion and has begun at the Lisbon hostel, part of an estate refresh the Board wants in place ahead of next summer's peak trading season.
The Group's head office will relocate to its Elephant & Castle hostel in November, a move expected to generate cost savings as part of a broader review of head office and operational expenditure.
Safestay said it will provide a further update in due course.