Marston’s has reported “encouraging” trading for the 16 weeks to 21 January as it updated ahead of its annual general meeting today.
The company said like-for-like sales in its Destination and Premium arm were up 1.5% year-on-year. This included like-for-like food sales growth of 0.6%, wet like-for-like sales growth of 1.4% and “strong growth in room income”, with operating margins in line with last year.
The company said its plans to open at least 20 new pub-restaurants and bars and five lodges this year were on track.
In Taverns, managed and franchise pub like-for-like sales were 1.5% ahead of last year and in Leased, profits are estimated to be up around 2%.
In Brewing, with own-brewed volume was up 3% in the year to date and operating margins slightly ahead of last year.
Chief executive Ralph Findlay said: “We traded well over the Christmas period with like-for-like sales growth for the fifth successive year despite tough comparatives. In Brewing, we have continued to outperform and once again have achieved good growth with a particularly strong performance in the off-trade.”
Simon French, of Cenkos, said: “Whilst the update may lack the stellar sales growth reported by M&B over the Christmas period, the contrast in margin is stark and we believe the group is well positioned to continue its outperformance of the market.”
Mark Brumby, of Langton Capital, said: “Marston’s shares are trading at c9.6x current year EPS and they yield 5.5%. This, particularly for a freehold-based group, would appear to be factoring in a consumer slowdown that is not yet evident and which may not happen.
“The consensus view is that consumers will be squeezed this year but, as we have commented a number of times, in the absence of big job losses, we could see large ticket spending being postponed whilst small ticket spend holds up. Indeed, if some EU workers return home, there may be a shortage of labour in the UK over the coming years and, whilst this is not good news for inflation, it could buoy real wages.
“Overall, we consider Marston’s shares to offer good value.
“We have suggested before that the winners and losers in respect of sales (JDW & MARS vs RTN and perhaps MAB, arguably GNK now) are beginning to make themselves plain with the former comfortably beating the Peach Tracker on a regular basis and the latter underperforming – at least until recently in the case of MAB.
“This is not achieved without effort and, amongst the first as it was to dispose of tail end units, to identify new build as an area of growth and to embrace franchises and everyday low pricing, Marston’s has worked hard over several years to achieve its current position.
“Marston’s now has a smaller number of pubs overall but it has improved the quality of its estate markedly. It has transformed its business over recent years and it is now beginning to reap the benefits. Its tail has gone and its >150 new-build pubs are trading strongly.”
