It hasn't been a good week for Scottish & Newcastle. Its board probably expected to cheer the City with its interim results last Tuesday û with its news of growing sales for Kronenbourg in both the UK and Europe and increasing like-for-likes in its star restaurant brand Chef & Brewer.
How wrong they were. The stock market's response to its figures was to slice 11% of the share price, with the result that S&N missed out on its expected return to the FTSE 100. Not a good week's work.
What the analysts homed in on was the negative like-for-like sales performance across S&N's pub estate, and especially in the Greenalls pubs the group acquired 12 months ago.
The fact that S&N is now committed to selling up to 1,000 of its worst performers is simply 'too little too late' as far as the hard core critics are concerned. It has been promising a sale since the summer, but failed to give any firm details last week. The process is now unlikely to start until late January at the earliest.
The clear warning from some in the City now is that the share price won't recover until something more radical is put on the table. For some, nothing short of a complete divorce between retailing and brewing will do. What the City wants is focus - and if S&N sees itself as a major force in European brewing that's what it ought concentrate on, and only that. They certainly don't want to hear chairman Brian Stewart talking about the virtues of vertical integration any more.
The problems with the Greenalls acquisition set in right from the start. The decision to buy appears to have been driven more by the board in Edinburgh than the retail team in Northampton; the pubs were in a worse state than the purchasers first thought; and, most seriously, the group has been too slow in selling off the dross and converting the best sites into successful concepts.
To be fair, S&N has had success in turning round brands such as Millers Kitchen, rolling out the acquired Premier Lodge brand and fuelling the fast expansion of Chef & Brewer. It is just that the bottom end has been too much of a drag.
The truth amount acquiring large tranches of pubs is that like-for-likes start going south as soon as the estate goes on the market and continue until they become fully assimilated by their new owners. The City may not always appear to understand this, so as an operator you have to get the pain over as quickly as possible.
The likes of Bass, Greene King and Enterprise Inns have managed to do just that.
The lessons for those waiting to snap up the thousands of pubs now going on the market from Bass, Whitbread, W&D and S&N, itself, are all too clear.
How wrong they were. The stock market's response to its figures was to slice 11% of the share price, with the result that S&N missed out on its expected return to the FTSE 100. Not a good week's work.
What the analysts homed in on was the negative like-for-like sales performance across S&N's pub estate, and especially in the Greenalls pubs the group acquired 12 months ago.
The fact that S&N is now committed to selling up to 1,000 of its worst performers is simply 'too little too late' as far as the hard core critics are concerned. It has been promising a sale since the summer, but failed to give any firm details last week. The process is now unlikely to start until late January at the earliest.
The clear warning from some in the City now is that the share price won't recover until something more radical is put on the table. For some, nothing short of a complete divorce between retailing and brewing will do. What the City wants is focus - and if S&N sees itself as a major force in European brewing that's what it ought concentrate on, and only that. They certainly don't want to hear chairman Brian Stewart talking about the virtues of vertical integration any more.
The problems with the Greenalls acquisition set in right from the start. The decision to buy appears to have been driven more by the board in Edinburgh than the retail team in Northampton; the pubs were in a worse state than the purchasers first thought; and, most seriously, the group has been too slow in selling off the dross and converting the best sites into successful concepts.
To be fair, S&N has had success in turning round brands such as Millers Kitchen, rolling out the acquired Premier Lodge brand and fuelling the fast expansion of Chef & Brewer. It is just that the bottom end has been too much of a drag.
The truth amount acquiring large tranches of pubs is that like-for-likes start going south as soon as the estate goes on the market and continue until they become fully assimilated by their new owners. The City may not always appear to understand this, so as an operator you have to get the pain over as quickly as possible.
The likes of Bass, Greene King and Enterprise Inns have managed to do just that.
The lessons for those waiting to snap up the thousands of pubs now going on the market from Bass, Whitbread, W&D and S&N, itself, are all too clear.
