Marston's has become the latest major pub chain to report upbeat figures as consumers continue to value eating and drinking out despite ongoing pressure on household budgets.
In a trading update to shareholders chief executive Justin Platt said the group put in a strong performance for the year to the end of September as revenue increased by 5.8%, with both food and drink sales showing "good momentum". Profits will therefore be in line with previous forecasts in the region of £40.5 million.
In July the group completed the £206m disposal of its 40% stake in Carlsberg Marston's Brewing Company (CMBC), bringing an end to the Wolverhampton firm's 190-year involvement in brewing. Marston's originally formed CMBC in October 2020 at the height of the Covid-19 pandemic when it sold a 40% stake to Carlsberg in return for a £273m upfront payment.
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In addition to this Marston's also sold a number of pubs during the year, including 18 to Admiral Taverns and 23 to Chester-based Red Oak Taverns.
The group has cut its debts by more than expected, down by approximately £300m from the previous year to £885m. Mr Platt attributed this to "a strong trading performance, our disposals strategy, [and] the sale of our 40% share in CMBC".
"The strong revenue performance is very pleasing," he said. "This reflects the quality of the experiences we are providing for our guests as well as the continued focus and passion of our team.
"This performance, combined with our recent disposal of CMBC puts Marston's in a strong position to drive value for our shareholders as a focused pub business."
The update confirms Marston's place among those still standing in the UK's shrinking licensed trade industry, which has been battered by the lingering impact of Covid lockdowns and the double-digit surge in inflation that followed thereafter.
About a quarter of pubs in the UK, some 13,000, have closed since 2000. More than 500 freehold pubs were sold in 2023, 34% of which no longer operate as pubs.
Most of these have been small independent pubs, which lack the scale that their larger counterparts are able to leverage. Larger chains have been able to consolidate their business around bigger bars.
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Mitchells & Butlers, the owner of renowned Glasgow tavern The Horseshoe Bar, is among those expected to mop up market share as smaller competitors continue to fold. The group manages more than 1,700 restaurants and pubs across the UK - including well-known chains such as All Bar One, Harvester and Toby Carvery - and said last month that it continues to anticipate annual results at the top end of expectations.
Last week JD Wetherspoon said it will resume dividend payments for the first time since the pandemic, having beat market expectations by posting a 73.5% rise in annual pre-tax profits to £73.9m.
Greg Johnson, research analyst at Shore Capital, said Marston's has significantly increased cash generation which has "historically been a disappointment".
"The group has broadly no 'net' bank debt and cash generation is now comfortably above scheduled bond repayments," he observed. "We see increasing balance sheet flexibility and optionality, which should be further supported by a potential upward revision of the year-end property valuation."
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