Pub operator Marston’s has warned that its annual profits will come in below last year’s due to weaker food sales and higher wage costs.
In a trading update for the year ended 28 September, the group said it expected to report underlying profit before tax of around £101m, compared to £104m the previous 12 months, with EBITDA broadly flat. Total group turnover was up 3% to £1.2bn.
Overall pub sales increased 3%, including like-for-like sales growth of 0.8% and the contribution from new pub openings. In the most recent 10 weeks, like-for-like sales were up 1.9%.
Its wet-led pubs performed relatively well with managed and franchised like-for-like sales growth of 1.9%, including growth of 5.4% in the last 10 weeks.
However, its food-led pubs saw like-for-like sales growth of just 0.1%, with the group blaming weak consumer confidence and high levels of competition in the casual dining sector. Operating margins were also below last year, reflecting increased margin investment and higher labour costs as a percentage of sales.
Meanwhile, total volumes at the company’s brewing arm were up 1%.
Ralph Findlay, Chief Executive Officer, commented: “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.”
The company added that it was prepared as it can be for a potential no-deal Brexit on 31 October. “We have implemented our contingency plans to ensure we can best service our customers over the key Christmas trading period,” it said.
