Marston’s in ‘strong’ position as pub chain outperforms market
Pub operator Marston’s has reported sales growth ahead of the wider market and said its profit this year will be in line with expectations.
The FTSE-listed firm told markets this morning that total retail sales for the 52-weeks to 28 September were 5.8 per cent higher than the prior year, with growth in like-for-like sales of 4.8 per cent.
This was just above analysts’ expectations of 4.5 per cent growth in like-for-like sales in the full year.
It said sales of both food and drink showed “good momentum”, with food sales “particularly encouraging” after a menu simplification.
Marston’s, which operates 1,339 pubs across the UK, added that its “strong trading performance and growth ahead of the broader market, coupled with the continued focus on driving cost efficiencies” gave it confidence in its full-year profit guidance.
Earlier this year, the pub chain sold its stake in Carlsberg for more than £200m as bosses outlined plans to focus “entirely on pubs”.
The resulting windfall not only boosted shares, but also reduced net debt, Marston’s said.
The firm expected net debt for the full year to be approximately £885, a reduction of £300m year on year.
Justin Platt, chief executive of the company, said: “The strong revenue performance is very pleasing. This reflects the quality of the experiences we are providing for our guests as well as the continued focus and passion of our team.
“This performance, combined with our recent disposal of [Carlsberg] puts Marston’s in a strong position to drive value for our shareholders as a focused pub business. We look forward to sharing more about the Marston’s growth opportunity at our investor day next week.”
Last month, data intelligence group Altus warned that pubs face a “double whammy” of property tax rises and the end of the business rate relief for pubs next April.
Pubs have been struggling with soaring costs since the pandemic, and while they currently receive a 75 per cent discount off their business rate bill up to a cash cap of £110,000, this is set to end at the end of March next year.
Business rates are also set to rise next April in line with September’s headline rate of inflation which, if unchanged from August, could also add an extra 2.2 per cent to bills next year.
Julie Palmer, partner at Begbies Traynor, said: “Despite the recent spell of poor weather, a bumper summer of sport provided a significant boost to sales for the pub giant. Consumer spending is cautious due to the economic climate, yet Marston’s has adapted its offering to maintain customer loyalty and satisfaction, with food sales driving growth as we head into the festive season.
“Labour’s upcoming Budget casts a long shadow and the pub sector will be hoping that the government doesn’t make any impactful changes to business rates or the minimum wage. Even so, Marston’s strategic focus on its pub operations, following the divestment of its brewing joint venture with Carlsberg, should keep it on course to navigate headwinds effectively.
“In an era where many pubs are reducing hours to manage costs, Marston’s has managed to maintain a strong offering that prioritises long-term customer relationships and profitability. It’s a challenging time for the industry, but Marston’s appears to be on a solid footing as we enter Christmas party season.”