Regent Inns told shareholders yesterday that it was refusing to go down the deep discounting line being pursued by much of the High Street bars market, and its operating margins were actually increasing.

Regent's chairman Peter Savage, speaking at the group's annual general meeting in central London, said the market place was experiencing "more testing" trading conditions caused by the uncertain economic position and high levels of price discounting,

However, he said, the company had refused to match rivals' price cuts, "in the firm belief that our brands will compete successfully in both the short and long term through greater differentiation and added value."

The policy has been vindicated, Savage said, because "pub operating margins for our branded businesses have in fact increased in the first three months of the financial year."

Regent, which runs the Walkabout, Bar Risa/Jongleurs and Pals chains, said it had seen year-on-year sales growth of 38% for continuing operations over the first 16 weeks of the new financial year.

Like-for-like sales at Walkabout were down 2.7% on the year, against a 14.1% increase in the same period last year. The fall was blamed on a lack of sporting events during the period compared with 2001, which saw, among others, the World Cup qualifying games and Six Nations rugby.

Like-for-like sales for Bar Risa/Jongleurs were "positive", the company said, with Jongleurs up over 20% for the same period. The company said that there had been strong early bookings for the December.

The company plans to open two further Walkabouts and two new Bar Risa/Jongleurs venues before Christmas.