Marston’s this morning conceded that its pubs won’t open until March at the earliest – but said it is confident in its ability to bounce back when the starting gun is fired.
Sales during its latest quarter, for the three months to 2 January 2021, reached £54m as trading was materially disrupted due to Covid-19-related trading restrictions.
All of its pubs are now closed and it anticipates that this isn’t likely to change until at least March – and even then it expects some of the previous barriers to remain – based on comments from Prime Minister Boris Johnson about the potential for lifting restrictions as the vaccination programme progresses.
Chief executive Ralph Findlay said that when conditions are lifted, its predominantly suburban pub estate should be well-positioned to benefit from strong consumer demand.
“With the roll-out of the vaccine programme now underway nationwide, we remain well-positioned to rebuild trading momentum once restrictions are lifted, as well as to leverage potential market opportunities open to us,” he said.
“We have a clear strategy in place which leaves us confident for the future of our business over the medium term.”
Last month, Marston’s exchanged contracts with SA Brain to operate its portfolio of 156 pubs in Wales, on a combination of leased and management contract arrangements.
These pubs generated a pre-Covid outlet EBITDA of £14m from which it will pay rent of £5.5m per annum with effect from April 2021, representing a 2.5x rent cover.
Mr Findlay said the SA Brain transaction demonstrates its commitment to growing its pub business and its confidence in the medium-term outlook for the UK pub sector.
During the quarter, Marston’s has continued to focus on cash preservation with all non-essential spend avoided.
Government support is being accessed through the job retention scheme, with 97% of Marston’s employees currently furloughed, and business rates relief.
Recently announced grants will be applied for subject to compliance with State Aid rules. Cash burn in full lockdown is £3m to £4m a week, before scheduled securitised payments.
As a consequence of having significant liquidity in its financing arrangements, the absence of any near-term refinancing requirements, and in the expectation that the outlook for the second half-year is much more positive, Mr Findlay said the business remains confident in its ability to navigate the current difficult environment.
But he also called in the government to provide further support: “The pub sector has been closed for much of the last nine months and remains in a very difficult position. Regrettably there have been casualties across the sector and It is vital that the government reviews urgently the opportunity to continue to support pubs as we reopen the economy in the coming weeks.
“Pubs are viable businesses which are part of the social fabric of Britain and which make a major contribution to the economy and the communities in which they serve. It is vital that they not only survive the short-term crisis but are supported in order to recover and flourish. Extending the business rates holiday and VAT cut for the rest of this year is a minimum requirement.”