JW Lees goes back to basics
FAMILY-owned brewer JW Lees is to close the Willoughby’s Wine Warehouse retail concept launched just over two years ago to compete with the likes of Majestic Wines.
Managing director William Lees-Jones said that the company’s decision to shut down the business, which had operated from sites at Sale in Trafford and Frodsham in Cheshire, was due to a decision by the company to concentrate on its core pub estate business.
He also said that it had “retrenched a bit” from other areas such as free trade sales, on which there is little profit but heightened risks due to the potential for bad debts when bar and restaurant owners go out of business.
Newly-filed accounts for the year to March 31, 2010 show that the JW Lees & Co saw its pre-tax profits fall by 8% to £2.8m despite a 1.6% increase in sales to £50.9m.
Its top line had also been boosted by the addition of ten new pubs bought from Punch Taverns in May 2009. Just before its year end, the company also bought the Trearddur Bay hotel at Anglesey from Longford Hotels Ltd – a company owned by chairman Richard Lees-Jones and vice-chairman Christopher Lees-Jones.
The 40-bed hotel had been in family hands (but not the company’s) since 1996. Some £2.5m-worth of new preference shares were issued by the company to pay for the hotel, which made a small post-tax loss of just over £132,000 during the year.
In total, the firm spent £13.7m on property purchases and refurbishments during the year. Since the year end, it has also bought two pubs in Bury and Accrington from the administrators of Mercury Taverns.
Lees-Jones said that although a number of smaller, less profitable pubs have been put on the market, those that remaining in company hands are benefiting from much higher levels of investment than the industry average. Some 42 of the company’s 172 pubs were refurbished during the year, meaning that retained outlets were likely to benefit from an upgrade every four years.
“It’s been a difficult market, but the guys have dealt with it very well and we like to think that we’re reasonably resilient,” said Lees-Jones.
“It shows that we’re willing to invest in the core business in a way that not many of our competitors are.”
He argued that JW Lees remained “in a much better position” than many of the listed pubcos that still labour under heavy debt burdens. As such, he said companies in the sector with cash to invest can still pick up quality assets at decent prices.
“If the banks really are going to be supportive as they say they will, then I think there are still quite a lot of opportunities.”
He said that the property market remained difficult in terms of disposals, however.
“The only pubs we’re looking to sell are those which we don’t believe have a great future.”
He added that banks were proving to not be as willing to provide asset-backed finance as they had been in previous years to entrepreneurs looking for loans to buy former pubs to start their own ventures.
The company’s net debt increased to almost £14m by its year end, up from £8.1m a year earlier. Net assets also increased to £52.4m (£50.1m).
