Marston's cautious despite sales growth

Marston's has reported strong sales growth in both its managed and tenanted estates, but sounded a warning note as consumer caution bites.

The national brewer has posted record underlying earnings per share for the year to September 29, up 10.1 per cent to 26.2p. The total dividend for the year was up 20 per cent to 12.83p per share.

The company said average profit per tenanted pub up was up 13 per cent, with total managed like-for-likes up 4.6 per cent; and food sales up a healthy 13.3 per cent.

Since the year end, managed like-for-like sales are up 2.1 per cent, but chief executive Ralph Findlay sounded a warning note.

He said: "We remain cautious about consumer confidence, regulatory cost pressures and the short term impact of the smoking ban.

"We are, however, well positioned to continue to exploit current trends, including the continuing growth in casual dining.

"We regard our value for money offers and mid-market position as appropriate for the current economic climate."

Across the year, group turnover increased by 9.6 per cent to £652.8m, boosted by the acquisition of the 153 pub Eldridge Pope business at the start of the year, as well as the smaller takeovers of Sovereign Inns and Ringwood Brewery.

In May, 279 smaller tenancies were sold.

The tenanted and leased Marston's Pub Company business, operating 1,722 pubs, saw turnover increased by 12.4 per cent to £200.9m, despite "a challenging background including the introduction of the smoking ban and poor summer weather", as well as around 100 pubs seriously affected by the summer floods.

In the pub company estate, average EBITDA per pub increased by around 13 per cent to approximately £65,000 per pub, boosted by the disposal at the bottom end.

On the the managed side, the 550-pub Marston's Inns and Taverns operation saw total turnover increase by 11.2 per cent to £367.8m, with food the star performer.

Total like-for-like sales growth of 4.6 per cent in the challenging market included like-for-like food sales growth of 13.3 per cent.

There were strong performances from the community food-led formats Marston's Tavern Table and Marston's Two for One, as well as town centre brands Pitcher & Piano, Que Pasa and Bluu.

The company estimates that 65 per cent of total sales in its managed estate are now made to customers for whom dining is the primary reason for visiting the pub.

In comparison, like-for-like wet sales increased by just 0.6 per cent against strong comparatives with 2006, which included a much better summer as well as the World Cup.

Brewing arm the Marston's Beer Company saw total turnover down to £84.1m from £86m in 2006.

The company lost business though the acquisition of customer Pyramid Inns by Admiral Taverns in 2006, and also reduced trading through third party wholesalers "to protect margins and improve control over assets, principally containers."