Spirit will not match Wetherspoons' 99p pint deal

Spirit, the managed division of Punch Taverns, will not respond to the 99p-a-pint offer from JD Wetherspoon, according to boss Mike Tye.

The company will do "just enough" on drinks prices to stay competitive with the lowest price for a pint currently set at £1.55.

Spirit has acted to protect its value proposition on food amid "promotional intensity" in this area of the market.

Tye said Spirit had not discounted at Christmas with prices set for individual markets. A survey of the estate had shown very few Spirit pubs compete directly JD Wetherspoon outlets.

Christmas sales had risen by 1.9% in like-for-like terms. Nevertheless, margin at Spirit has weakened by an enormous 5% in the 20 weeks to 19 January.

Finance director Phil Dutton said 2% margin deterioration resulted from regulatory cost increases and there had been a 1.5% margin hit from like-for-like sales being down 2.5% in the 20 week period.

Dutton added that a further 0.5% of margin decline had resulted from growth in food sales with the final 1% of lost margin down to the cost of sharpened food discounting to counter other offers in the market place.

Tye said that Spirit would re-open five of the 44 Orchid leases, which reverted to the company in December, next week.

Another 25 or so would be re-opened by the end of January. A couple of sites would only open seasonally. A dozen of or so venues would stay shut with "onerous lease provisions" expected.

The company said its rent roll had increased by around £7m after the reversion of the 44 leases.

Analyst Douglas Jack said the 5% margin decline at Spirit would result a circa 19% like-for-like profit decline.

Of the results chief executive Giles Thorley said that "none of this is ideal" but the managed estate performance had improved in a challenging market.