Shepherd Neame cuts 10% of staff
In a message to the 319-site operator’s customers, CEO of the Kent-based pubco and brewer Jonathan Neame revealed the business would also be asking more than 90% of its workforce step down from their current roles on a temporary basis.
The business will use the Government's extended furlough scheme to cover 80% of the wages of affected staff who earn up to £30,000 per annum.
On top of this, Shepherd Neame has pledged to fund the wages of all those affected earning more than £30,000 per annum so that they continue to receive 80% of their normal pay.
The company’s directors have also volunteered to take a temporary 20% reduction in salary
The operator has also announced it will waive all rent for its licensees during the second national lockdown.
“It is extremely disheartening to go into lockdown again after the immense efforts of the past few months,” Neame explained. “But, as evidenced by the overwhelming wave of support given to our pubs when we reopened in July, our communities need, want and love their local.
“We look forward to welcoming you back as soon as the situation allows.
“Shepherd Neame has weathered many crises in its long history and remains as well placed as any to emerge from this crisis, but there is a long winter ahead with many challenges for us all.”
Before the Prime Minister announced a second national lockdown, Shepherd Neame had 63 sites operating under tier two restrictions in addition to 257 sites in tier one.
What’s more, in a trading update in early October, the 322-year-old operator revealed for the thirteen weeks to 26 September it achieved 73% of last year’s tenanted pub income – a figure that includes rental support for licensees during both lockdown and the phased reopening of its estate.
Most challenging period
On the day before the enforced closure of its pubs on 5 November under England’s second national lockdown, Shepherd Neame revealed that its turnover for the year to 27 June decreased to £123.6m.
According to the 52-week update, the operator traded well up to the outbreak of Covid-19 with turnover during the eight months to 29 February up 4.6% and underlying profit before tax up 6.1%.
What’s more, during the 18 weeks to 31 October managed like-for-like sales were 66% of last year’s levels while tenanted like-for-like income was 75% of prior year.
Own brand beer and cider volumes during the same period reached 98% of the prior year level with own beer volumes at 92% of 2019’s levels.
While Shepherd Neame’s net debt stood at £83.9m on 28 December 2019 it increased slightly to £84.4m on 27 June 2020 with £11m of tax liabilities that had been deferred in agreement with HMRC.
The company’s net debt figure stood at £84.8m on 31 October with the tax liabilities reduced to £4.7m alongside a further £1.1m of general deferrals.
“This has been the most challenging period any of us in the hospitality industry have ever faced. I am incredibly proud of how everyone across the business has reacted, and the ingenuity and team spirit shown by our licensees and team members during this time has been inspiring,” Neame explained.
“Trading during the summer months was encouraging, highlighting the strength of our offer and people’s undiminished desire to go out and socialise in a safe environment with family and friends.
“We have worked hard to drive positive cash flow in the new financial year and have sufficient liquidity for the foreseeable future. We welcome the ongoing support from the Chancellor, but the sector faces a very tough winter as we return to lockdown with fresh uncertainties.
“Shepherd Neame has weathered many crises in its long history and I am determined that we emerge from this crisis in a position of strength, ready to seize the opportunities that lie ahead.’’
