Findlay: ‘It will be tough to match lfls growth in Taverns estate next summer'

Marston’s chief executive Ralph Findlay has told MCA it would be ‘tough’ for its Taverns estate to match the like-for-like sales growth seen within its managed and franchised pubs this year (+3.8%), in 2019.

“In 2018 we had the benefit of a very hot summer, which may not reoccur next year, and the World Cup, which won’t happen next year, so it will be tough for them to do that again in summer 2019,” he said.

However he said Marston’s was expecting to grow that business further, through its acquisition of 15 pubs from Aprirose – half of which will open before Christmas and the other half before the end of January.

In a presentation to analysts yesterday morning, Marston’s chief financial officer Andrew Andrea said looking at the year ahead as a whole, it was not expecting the recurrence of the environmental factors which hit its Destination & Premium arm in 2018. “So we are expecting solid like-for-like sales growth,” he added. “In contrast, in Taverns I think we need to be realistic about our expectations, particularly in the second half of the year.”

Findlay said the general trend for premiumisation and experience put its Pitcher & Piano – which has just opened a new site in Sheffield – and Lost & Found concepts in good stead.

He added that while he was cautious about putting a number on the scope of expansion for Foundry Project, of which it is about to open its third iteration in Manchester, he felt that alongside Lost & Found the two brands have lots of potential for future growth, which he envisaged would come from new sites, rather than conversions.

On the brewing side, he said the company believes there is further market share to be gained in premium ales, whether bottle or cask, in addition to some of its licensed brands – particularly Estrella Damn.

Its existing drinks portfolio already contains no and low alcohol beers, as well as no-alcohol gins, which he said he been performing really well, albeit from a small base. Sales of non-alcoholic beer have increased by 46%, and gin by 182%, while low sugar content soft drinks have also seen strong growth of +65%.

Responding to the full-year results announcement yesterday, analysts Peel Hunt noted that, although net debt is up £57m, the company has announced a roadmap to improve cash flow and reduce net debt/EBITDA by 0.2x pa, from 6.2x to 5.2x, over the next five years, whilst maintaining the dividend. It said that with lfl sales and Christmas booking up in early 2019E, it is holding its forecast.

“These expect c1% LFL sales and slight margin reduction in D&P and Taverns’ combined managed pubs, with management expecting to mitigate most cost increases,” it said.

JP Morgan said that despite continuing cost headwinds in the pub sector, it expected Marston’s to be able to grow profits in FY19E on the basis of the acquisition of 15 pubs from Aprirose.