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Pub chain Marston’s has posted a strong first half of the financial year off the back of food and drink sales as it looks ahead to the bumper summer months filled with sport, including the Euros.
Operating 1,395 pubs across the UK, Marston’s announced this morning an increase in both revenue and profit for the 26 weeks up to 30 March. Underlying revenue rose from £407 million to £428.1 million, while profit increased from £43 million to £52.7 million. This performance outpaced market expectations.
The recent sunny weather provided a significant boost to pub sales as patrons flocked to beer gardens across the country. This positive turn is particularly welcomed by the hospitality sector, which has been grappling with a challenging cost-of-living crisis.
The increase in like-for-like sales, which grew by 7.3% during the period, contributed significantly to Marston’s success. Additionally, the pubs experienced a 22% rise in operating profit. The company also reported a reduction in debt and effective cost management, positioning itself favourably for the second half of the year. With major events such as the Euros and Olympics on the horizon, Marston’s expects to attract millions of Britons to its venues.
Despite the positive trends, Marston’s reported a statutory loss before tax of £43.5 million, up from £38.1 million in the same period last year. This was attributed to two non-cash items: a £25.8 million increase in liabilities from interest rate swaps and a £16 million charge related to the impairment of CMBC’s ale brand and onerous contract provision.
Chief Executive Justin Platt commented: “A positive first half, Marston’s has delivered strong like-for-like sales growth of 7.3 per cent, outperforming the market and achieving an impressive 22 per cent uplift in pub operating profit. We have managed costs well and made further progress to reduce debt.”
Platt expressed optimism for the second half of the year, highlighting the potential of Marston’s upgraded pub gardens and popular food menus to attract guests during major sporting events. “Reflecting on my first few months with Marston’s, I am very excited by the potential that lies ahead. The UK pub market offers significant value-driving opportunities for those who can engage and deliver for their guests. With our high-quality estate and guest-obsessed team, we are well placed to capitalise and deliver consistent, reliable cashflows that will drive value for our shareholders.”
Looking forward, Marston’s aims to build on its positive trading momentum, leveraging the seasonality of its trade, which typically sees the majority of revenue, profit, and cashflow generated in the second half of the year. The company plans to drive efficiencies, targeting at least £8 million in cost savings, primarily from reduced energy and labour costs.
Marston’s also addressed recent job cuts, stating it had initiated an operational programme to streamline the business and enhance efficiencies. The one-off headcount related costs, which amounted to £0.5 million in the current period and £2.9 million for the 26 weeks ended 30 September 2023, are expected to be short-term and non-recurring. As of 30 March 2024, £3.4 million had been incurred as part of the reorganisation, restructuring, and relocation costs.
With a promising outlook for the summer and strategic plans to drive efficiencies, Marston’s is well-positioned to capitalise on the anticipated increase in pub-goers during the major sporting events.
