Marston’s cheered by strong trading despite cost pressures hitting margins

Wolverhampton-based pubco and brewer Marston’s has said trading remains robust despite costs eating into tight margins.

In a trading update for the 16-week period to January 20 the company said trading across its pub network had been positive, despite the bad weather during December and between Christmas and the New Year, hitting sales.

Ahead of today’s AGM, it said: “We continued to make progress in the period with growth in both sales and underlying earnings, helped by the acquisition of the Charles Wells Brewing Business in May 2017 and the contribution from the 19 new-build pubs in financial year 2017.

“Snow and icy weather towards the end of the period, both in early December and between Christmas and New Year, caused some unavoidable disruption to the business.”

For its Destination and Premium outlets, total sales for the period were up 4.9% reflecting the contribution from the estate expansion in 2017.

Like-for-like sales in the period, excluding the impact of the two snow-affected weeks, were up 1.1%. However, the weather impact on like-for like sales was around 2%, and on an unadjusted basis like-for-like sales were down 0.9% in the period. The company has estimated this will impact profit by around £1m.

“We continue to maintain a disciplined approach to operating margins without recourse to the significant discounting which has remained prevalent in the sector. Margins remain in line with expectations and are slightly below last year reflecting cost increases as previously guided,” it added.

It said there were no changes to the cost guidance previously provided in November 2017.

In its Taverns business, like-for-like sales for the period were up 2.6%, benefiting from the performance of franchise-style agreements and an improved drinks range.

The Leased business was said to have performed well, with profit growth in the period estimated to be 2%.

Its Brewing operation proved to be strong, with own-brewed volumes up 33%. In addition to the acquisition of the Charles Wells brewing business, the group said it was benefiting from distribution gains achieved in 2017 and a stronger brand portfolio.

It said it remained on-track to achieve the targeted synergies as a result of the Charles Wells acquisition.

It is also on target to open 15 pub restaurants and bars and six lodges this year.

Ralph Findlay, Chief Executive Officer, said: “We are pleased with our progress, which included record total retail sales in our pubs of £4 million on Christmas Day – 5.4% higher than last year. We continue to achieve growth against tough market conditions and are benefiting from investment in both pubs and brewing.”

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