Coronavirus puts £10m dent in Fuller’s figures

Fuller’s financial results for the 52 weeks ended 28 March 2020 revealed strong pre-coronavirus sales growth across all areas of its business with drinks sales up by 1.7%, food sales increasing by 1.9% and accommodation sales up 5.9% for the 29 weeks to 7 March. 

What’s more, Fuller’s saw like-for-like sales growth of 2.3% across its 215 managed pubs during the same period, though like-for-like profit in its 177 tenanted inns fell 3%.  

Overall, this contributed to revenue and other income from continuing operations increase by 3% from £324.7m to £333m during the year to 28 March, with statutory profit before tax hitting £166.2m.

“When we released our interim statement in December 2019, we were on track to finish the financial year in a good position having received the proceeds from the sale of the Fuller’s Beer Business​ and with a clear future path laid out before us,” Fuller’s chief executive Simon Emeny said.

“It had been a transformational year for Fuller’s but we would never have anticipated that we would end it in March with the whole hospitality industry in a state of closure and with no income stream. 

“Against this backdrop, it is easy to forget the financial year started in April 2019 with the sale of the Fuller’s Beer Business to Asahi Europe for an enterprise value of £250m, followed in October 2019 by the acquisition of Cotswold Inns & Hotels​ – seven stunning hotels in the heart of the Cotswolds – from existing bank facilities. 

“The decision to sell the Fuller’s Beer Business at that time has proved fortuitous and ensured we were in a strong position, with substantial liquidity headroom, when the coronavirus pandemic struck.”

Too early to draw conclusions

Fuller’s financial update also revealed that the Covid-19 crisis and enforced 15-week closure​ of its estate hit the business for an estimated £10m.

Fuller’s entire estate of almost 400 pubs was forced to close between 20 March and 4 July, when the operator opened 27 of its sites​ as part of the gradual resumption of trade across its portfolio. 

As reported by The Morning Advertiser​ (MA)​, Fuller’s suspended commercial rent​ for its tenants amid the Covid-19 outbreak on 24 March. 

“While it is still early days, it is pleasing to see our teams welcoming guests back and we have taken a range of actions and measures to ensure our pubs are safe and inviting,” Emeny continued.

“The first stage of our three-stage plan saw 27 pubs open on 4 July 2020 and another 136 since – meaning more than 75% of our managed pubs and hotels are now open. Almost all our tenanted inns have also reopened. 

“While it is too early to draw any meaningful conclusions, we are comfortable with the level of trade and we continue to monitor footfall in those areas where our pubs are not yet open.

“While we are prepared for business, particularly in London, to take some time to return to normal, we are well placed to satisfy the uptick in demand for staycations as many customers holiday closer to home – an opportunity we are supporting with marketing activity for our Beautiful Bedrooms. 

“We continue to focus on minimising cash burn and returning to profitability. During August, we will gradually reintroduce rent for tenants – but on a tapered basis to help with their own return to sustainable trading levels.”

During the period of enforced closure, Fuller’s completed the integration of Cotswold Inns & Hotels and Bel & The Dragon after recent acquisitions, as well as offloading 14-site pizza chain, The Stable, to Three Joes for an undisclosed sum​.

Stronger position than many

In a strategy update, Fuller’s also revealed it had purchased Pier House – a new freehold office for its support centre in Chiswick – opened new build site the Windjammer at London’s Royal Docks and built the Bear of Burton near Christchurch in Dorset. 

Emeny recently told The ​MA​ editor Ed Bedington that Fuller’s relies “very heavily” on workers returning to offices​. 

“In these uncertain times, it is challenging to accurately predict the future,” he added. “But having begun reopening our pubs nearly four weeks ago, it is encouraging to see customers returning to our pubs and this steady growth in consumer confidence will be the key to success – not just of our company or our industry but the economy as a whole. 

“We have a well-balanced estate geographically and that, combined with a freehold asset base and the calibre of our people, puts us in a stronger position than many to build towards sustained profitability in this full year and a strong start to the 2022 financial year.

“A freehold approach is a fundamental foundation of our long-term business. It is not always fashionable, but yet again it underpins our ability to survive the toughest of times. 

“We are proud to be 175 years old this year and with our balanced and well-invested estate, prudent approach to finance and amazing team of dedicated people, we will still be here for generations to come.”