Leading analyst Douglas Jack has said Fuller’s continues to outperform the London managed pub market and forecasts for its full-year performance may be cautious.
He said he while trading had been strong he was holding forecasts at the moment as only 15 weeks of the new financial year have been completed.
He said: “Managed pub/hotel LFL sales rose 5.7% during the first 16 weeks (against a 7.3% comp) in a London managed pub market that was up 1.9% over the same period (source: Coffer Peach Business Tracker). We estimate that LFL sales rose 6.0% over the last seven weeks. With the company continuing to invest in amenity, product, service and digital marketing ahead of its competitors, we believe our full year assumption of 2.5% is cautious.
“One managed pub (The King’s Head, Earls Court – freehold) and two Stable Pizza restaurants (Plymouth and Winchester) were added during the first 16 weeks. In addition, the freeholds of two existing leasehold sites were purchased. Our forecasts assume the opening of just two new managed pubs and five new Stable Pizza restaurants pa over the next three years.
“Tenanted LFL profits were up 4% during the first 16 weeks (against a 3% comp). Fuller’s has a strong track record for growing LFL profits, driven by: investment in multiple areas; a south-east England-orientation; as well as improved training and support. Our FY forecast assumes 2% LFL profit growth.
“Beer and cider volumes were level during the first 16 weeks against a tough +7% football World Cup-related comp. We estimate they rose by 3% over the last seven weeks, and forecast volumes to grow by 1% over the full year, with a possible benefit from the Rugby World Cup to look forward to.
“We are holding our forecasts, and believe forecast risk remains on the upside due to trading and expansion momentum. With net debt/EBITDA at 2.8x, there is scope for our expansion assumptions to be exceeded.”
