Marston’s confirmed yesterday that it is “on track” with plans to open at least 20 new pub-restaurants and bars and five lodges in the current financial year.
Investors were keen to see how the group had performed over the recent seasonal period after a run of positive results from competitors. And they weren’t left disappointed after CEO Ralph Findlay revealed that the six weeks to 21 January had brought growth across the business.
“Our performance in the financial year to date has been encouraging, including good trading over the Christmas and New Year period despite tough comparatives,” he said. It is the fifth successive year of growth for the business, he added.
In Destination and Premium, like-for-like sales were 1.5% ahead of last year including like-for-like food sales growth of 0.6%. Operating margins remained in line with last year, which the company said was an “important” result.
In Taverns, managed and franchise pub like-for-like sales were 1.5% ahead of last year. In Leased, profits are estimated to be around 2% ahead of last year.
Analysts said that with rising costs and a reduced household income, Marton’s might find it a challenge to achieve similar growth throughout the rest of the year.
Paul Hickman, analyst at Edison Investment Research, commented: “For the sixteen weeks to 21 January management describes performance as “encouraging” with solid growth in trading – the main divisions were quite similar in performance terms with Destination and Premium up 1.4%, and managed and franchised pubs up 1.5%. Leased pubs were up 2% and own-brewed volumes up 3%.
With the rise of inflation and a downturn in household income, growth like this cannot be taken for granted for the rest of the year. Nevertherless, Marston’s is a significant operator of value offers, for example in its Two For One and Carvery brands, which should play relatively well in a more constrained consumer economy. The company also has a solid reputation as a reliable dividend payer, and management sets great store by maintaining this reliability. The shares currently yield 5.6% and are priced on a reasonable 9.5x consensus earnings for the current year to September 2017.”
The company will announce its interim results for the 26 weeks to 1 April 2017 on 17 May 2017.