Marston’s wet-led pubs ‘lead the charge’

Wet-led pubs “led the charge” at Marston’s, with its Taverns business achieving like-for-like sales growth of 1.9% for the year ended 28 September 2019, including 5.4% in the last 10 weeks.

In a trading update ahead of its preliminary results, Marston’s reported group turnover was up 3% to £1.2bn, with EBITDA expected to be broadly flat year on year.

Underlying profit before tax is expected to be around £101m, with higher operating profits in our Taverns and Beer businesses offset by lower earnings in Destination and Premium.

Total pub sales increased 3%, including like-for-like sales growth of 0.8% and the contribution from a pub expansion programme.

In the most recent 10 weeks, like-for-like sales were up 1.9%.

Against a strong comparative year, wet-led Taverns pubs performed strongly with managed and franchised like-for-like sales growth of 1.9% including growth of 5.4% in the last 10 weeks.

At Destination and Premium, like-for-like sales were 0.1% ahead of last year, reflecting stronger drink sales offset by lower food sales.

Premium Pubs and Bars performed well with growth in Pitcher & Piano, Revere Bar and Revere Country.

Operating margins will be below last year principally reflecting increased margin investment and higher labour costs as a percentage of sales.

At Marston’s Beer Company, total volumes were up 1% for the period, following an “outstanding” year for brewing last year.

Net debt for the year ended at £1.39bn.

In 2020, Martson’s has proposed to invest an additional £2-3m in pub training, localised pub team incentive initiatives and digital marketing investment.

The group is also seeking to accelerate its debt reduction target of £200m by 2023 by increasing its disposals guidance from £40m to £70m for the current financial year.

Underlying profit before tax in 2020 is expected to be at a similar level to 2019, reflecting growth in underlying operating profits offset by increased disposal activity, additional pub investment and higher interest charges.

Ralph Findlay, CEO, said: “Our drinks businesses have performed well, achieving further growth against an exceptionally strong 2018. Wet-led pubs have led the charge continuing their positive trajectory and food pubs have achieved modest sales growth.

“Operationally, we remain focused on further improving our proposition and plan to make additional investment in both our pub teams and digital marketing in the forthcoming year.

“Our principal focus is on reducing our net debt by £200m and creating a high quality business that is cash generative after dividends and capital expenditure. We are making encouraging progress and have decided to increase the pace of our disposal programme this year to accelerate the achievement of this target.’’