Spirit Pub Company said this morning that it remained on track to deliver full year expectations after reporting continued strong sales growth across its managed estate during its second quarter.
The group reported a 4.6% increase in like-for-like sales across its c800-strong managed estate for the 12 weeks to 3rd March 2012 (+5.6% for the 28 weeks to the same date).
Performance over the 12 weeks was driven by a 6.2% rise in food sales (+7.2% for the 28 weeks) and a 3.9% rise in drink sales (+5.2% for the 28 weeks).
The group said that performance across its managed division was driven by continued investment in its brands, estate and people. It said it remained encouraged by further progress in both food and drink sales and noticed particularly good results where it had introducing food into its drinks-led pubs. For example, its Flaming Grill brand, now with 81 pubs, saw its food mix increase to 50% of sales in the first half of the year.
The group said that its investment programme into brand innovation remained on track, with 156 pubs undergoing major refurbishment in the first half of the year, meaning that 76% of its estate had now been invested in and branded.
It has completed the refurbishment of its Chef & Brewer brand and its close to completing the investment across its Taylor Walker and Fayre & Square formats. The group said that its remaining capital programme would be largely focused on its Flaming Grill, John Barras and Original Pub Company brands.
Like-for-like net income across its c550-strong leased estate fell 6.4% during the 12 weeks (-4.5% 28 weeks), but Spirit said that despite a slowdown in trend during the quarter the performance of the division remained in line with its full year expectations.
Having now taken full control of its leased estate following the end of the management services agreement with Punch Taverns, the group said that its new team, which is led by managing director Chris Welham, was focused “on driving performance improvement and realising value from our cash generative portfolio of pubs”.
It said it had identified up to 80 underperforming pubs for disposal from the division. It has so far converted seven leased pubs to its managed brands to date and expects to convert up to 20 during the course of the current financial year.
During the period, the company repurchased a further £11m (nominal value) of its A3, A4 and A5 bonds at a cash cost of £8m (average 76p in the pound). Year to date it has now repurchased £36m of its A3, A4 and A5 bonds at a cash cost of £28m (average 77p in the pound).
Mike Tye, chief executive, said: “We are pleased to report another strong quarter of growth, driven by a market-leading performance in our managed estate. Guests have continued to respond enthusiastically as we innovate, introduce food to more of our traditionally drink-led pubs and pursue operational improvements throughout the estate.
“Our strategy of investing in brands has proven successful, with three of our brand refurbishments now largely complete. Our focus is now turning to the Flaming Grill, John Barras and Original Pub Company brands. While we are mindful of the ongoing economic uncertainty and consumer pressures, we remain on track to deliver our full year expectations.”
