Greene King ‘weathering well’
GREENE King (GNK) may have managed to weather the worst of January’s snow storms, but the integrated pub and brewery giant expects the rest of 2010 to prove even tougher.
During the 38 weeks ending 24 January 2010, the Suffolk based pub chain reported a 4.3 per cent growth in sales, despite a three week dip in sales as a result of adverse weather conditions.
James Dawson, leisure analyst at Charles Stanley Securities, said Greene King still fared better than most of its competitors.
He says: “The trend had been a 7 per cent dip in sale during the storms but Greene King’s were only down 3 per cent.”
Greene King’s success during the bad weather was down to its local and destination pub bias.
Lawson said: “High street chains such as JD Wetherspoon (JDW) rely on people popping in during their lunch hour or after work, with large number of people staying at home Greene King benefitted because people were staying at their local.”
But with this month’s VAT increase, as well as an expected hike in personal taxation Greene King is expecting, like its competitors, things to get tough in 2010.
“One of the outcomes will be that people will spend less on pub-based drinking,” added Dawson.
So instead, the Suffolk-based company is hoping to capitalise on what it does see as a potential growth market, food-related drinking. Last year, Greene King raised £207.5m last year through a rights issue in order to acquire pubs from struggling rivals.
To this end, on Wednesday it announced it had bought eight freehold, food-led managed pubs from Punch Taverns (PUB) in a £15.9m cash deal.
Indeed, in 2009 like-for-like food sales growth remained very strong and its brewery arm also increased volumes by 7.2 per cent over the same period.
Greene King said it expected all parts of its business to continue weathering the storm: “The ‘health’ of our licensees continues to strengthen and new applications in December were 20 per cent up on the same month last year.
“We still anticipate targeted licensee support of between £6m and £6.5m in this financial year.”