Having registered a pre-tax profit £17.9m during the equivalent 2019 spell, and £19.4m at the end of its last financial year in March, the operator of close to 400 pubs revealed that it lost £22.2m in the first half of its 2021 financial year off the back of stringent Covid-19 trading restrictions imposed on the pub sector.
Its latest results statement explains that the enforced closure of Fuller’s estate saw its pubs shuttered for 14 weeks of the 26-week trading period.
What’s more, Fuller’s also revealed that revenue and other income fell from £167.1m in the first half of its previous financial year to £45.6m during the 26 weeks to 26 September – a drop of £121.5m or around 73% year-on-year.
According to company figures, however, during the final two months of the financial period, with the majority of the estate open, Fuller’s made an operating profit of £2m despite the severe restrictions in place with managed like-for-like sales outside of London 92% of the prior year and overall like-for-like sales 75% including transport hubs and central London pubs.
Fuller’s figures also stated that net debt excluding lease liabilities currently stands at £187.4m – an increase of £164.4m from the same point in 2019, £9m of which occurred in the past six months due to “tight management of cash burn and recovery of working capital”.
Time used wisely
“When the current lockdown was announced, we acted swiftly to implement the lessons learned last time round and this latest closure has been made with minimal stock losses,” chief executive Simon Emeny said.
“We also immediately placed 98% of our team members – across our pubs, hotels and in our support functions – on furlough or flexi-furlough, thereby minimising our cash burn.
“The extension of the Coronavirus Job Retention Scheme until March 2021 provides a degree of breathing space and will allow us to apply a sensible and measured approach to costs as we reopen our estate, particularly at the most affected sites in our city centres.
“We entered this crisis in a position of strength, buoyed by the sale of the Fuller’s Beer Business,” Emeny continued. “We have used the time and space created by the pandemic wisely – completing targeted investments in our estate, rightsizing our teams and utilising the support available to manage our cash reserves where possible.
“It has not been easy, but prudent financial management, an estate that is 92% freehold, and a strong balance sheet mean that we will be in the best possible position to get back on a growth trajectory.”
Tightened tiers present further challenges
While like-for-likes sales in managed pubs and hotels for the 34 weeks to 21 November were found to be 69% of prior year, Fuller’s latest statement added that 98% of team members are currently on furlough or flexi-furlough while sites remain closed during England’s second national lockdown.
“The imminent roll out of a vaccine is excellent news for the future,” Emeny continued. “The tightening of the tier system will present further challenges over the winter months, but we welcome the Prime Minister’s comments that we will see the need for restrictions fall away in the spring. Without doubt, a return to normality is in sight.
“We know our customers want to come back, we know they trust us to look after them and provide a safe and sensible environment to enjoy a great Fuller’s experience and, over and above this, we have a dedicated and passionate team of people with the ability and desire to delight, surprise and welcome back those customers."
Emeny added that the company remained optimistic about the future in the medium term and beyond. “But there is no doubt that this will be a tough winter and a very different looking Christmas,” he caveated.
“We will start to reopen our estate in a measured way, navigating the tier system and the restrictions that come with it. However, it is important that we see beyond these obstacles and look at the bigger picture.
“The excellent news of successful vaccines gives us confidence where previously there was uncertainty, and with the sensible decisions we have taken during the pandemic, Fuller’s is well-placed for future success.
“This business is armed with a well-invested and well-balanced, freehold estate, excellent people, robust financial foundations, a clear and consistent strategy, and the drive and desire to lead the way out of this crisis. The long-term future for Fuller’s looks positive.”