Yates Group today (Monday) issued a warning over the performance of its core Yates's Wine Lodge brand. It said that although the brand had not kept up the good start to early summer trading that the company reported in June, the brand's financial performance was also being hit in the short term by strategic decisions to reposition it taken earlier in the year.

As a result full year results for the group were unlikely to beat those for the last financial year, which ended in April.

The majority of recent lodge openings in the brand's traditional design style were taking longer than expected to achieve budgeted sales, Yates said, although new pricing initiatives were expected to improve their performance.

But, it added that lodges opened under the brand's new design format were performing better and in line with expectations. In the coming year over 50 sites would be refurbished in the new style, however the cost would be 75 weeks of disruption to sales.

The company said it had also taken action to re-position the brand's value pricing offer, and premium pricing on Friday and Saturday nights had been withdrawn. As a result gross margins had reduced. The scrapping of the 10pû15p weekend price differential would take £1m off the bottom-line. The company had also replaced its own-brand spirits with brand leaders and measure sizes had also increased to improve consumer value.

Margins were expected to recover during the second half of the year, it said, and although they were not expected to match previous levels, the changes were expected to improve sales volumes.

Yates said its other divisions were trading in line with expectations, with Ha! Ha! Bar & Canteen showing "good growth".

Group chairman Peter Dickson told M&C Report Online News that the strategic repostioning of the brand was causing "short term pain for longer term gain".

Dickson said that the brand had been struggling for a couple of years. "We recognised to the need to innovate, and at a significant pace," he added.

Although competition was fierce, in the first five months of the year like-for-like sales in its core 78 branches were up 2.5% for food and down less than 1% on wet sales, he said.

(First published online at 14.30hrs, 18/09/00)

(Updated online at 15.20hrs, 18/09/00)