Poor summer hits Marston's sales

The Wolverhampton-based firm, which has pubs across the West Midlands, also said it had decided to accelerate plans to cut debt and generate cash by deferring its remaining new-build plans.

In a trading update for the 42 weeks to July 20, Marstons has revealed like-for-like sales in the destination and premium category were up 0.1 per cent, while in taverns they were up 1.1 per cent.

Weaker overall sales in the last 16 weeks reflected strong trading last year, which included the football World Cup and an unusually hot summer.

Marston's said it continued to remain disciplined in terms of pricing, discounting and promotion, with operating margin in line with expectations.

It has decided to accelerate its debt reduction target, which had been to reduce net debt by £200 million in the period from 2020 to 2023.

It said it was proposing to defer £70 million of the new-build investment planned for the next three years and reallocate £20-30 million of funds into organic capital plans, which were generating significantly higher returns.

The company added it has made "good progress" and remains on track to hit its 2019 cash flow and debt targets.

Ralph Findlay, chief executive of Marstons, said: “We have achieved modest growth during the 42 weeks to date continuing the long term positive like-for-like sales trend despite May and June being hampered by relatively poor weather.

"We have a high quality, balanced pub estate and a highly disciplined approach to preserving margin, together with a leading beer business which continues to perform well leveraging our outstanding brand portfolio and increasing our market share.

“Having made good progress with our cash generation and debt reduction plans, we have subsequently decided to accelerate our efforts in this context and defer our remaining new-build plans and reallocate £20-30 million of the £70 million new-build capex over the next three years to drive higher returns from our existing estate.

"We believe that this focus will further enhance our returns from our existing pub business and reduce our debt at an even greater pace."

Russell Pointon, analyst at Edison Investment Research, said: “As might have been expected given the poor weather this year and tough comps last year due to the World Cup and hot weather, Marston’s has reported a slowdown in revenue growth.

"For the first 42 weeks, like-for-like growth in managed and franchised pubs has fallen from 3.9 per cent in H1 to 0.5 per cent, and destination and premium sites has fallen from 1.2 per cent to 0.1 per cent.

“Of most significance is the announcement that the company is deferring new-build investment in order to accelerate the debt reduction plans announced at the start of the year.”