Marston's post disappointing results

16th October 2008, 1:14pm

Marston's, the pub company, has reported a dip in annual sales but describes the performance as '…resilient in difficult market conditions'.

In a statement the company said: "During the second half-year declining consumer confidence and increasing inflationary pressures contributed to very testing market conditions. These factors, together with poor summer weather, are reflected in more subdued sales and, as anticipated, continued pressure on margins due to rising food, energy and brewing costs. Weaker sales and margin pressure have been mitigated by good cost management."

The company also highlighted the pressure that many other pub companies are feeling by saying that costs relating to employment, food, energy and brewing raw materials are expected to increase by a huge £12 million next year alone.

In their managed pub division like-for-like sales were down by 0.6% and the tenanted and leased pub division dropped 1.7%. Overall group profit was up by around 2% and the company said it would have to achieve growth of 3% next year to keep in line with the 2007-08 results.

Food orders now account for 36% of sales and average spend per head is up on last year.

The Financial Times said that these results have fared well compared with Enterprise Inns and Punch Taverns: "For a pub company facing a looming recession and weakening consumer confidence, Marston's has managed to avoid the worst of the sector downturn thus far. This has been mainly due to the company's budget food offerings, which have helped offset the decline in beer and gaming revenues.

"But dwindling consumer spending is heightening competition between pub chains and restaurants and the battle for the eating-out market is only going to intensify in the months and years ahead. At 5.1 times 2009 earnings, shares in Marston's do not look overly expensive, especially when compared with the average of 6.1 times the sector is commanding.

"That said, investors should bear in mind that higher-rated competitors such as Mitchells & Butlers have a bigger, better quality estate, with less of a budget clientele, and should prove better insulated as the economy weakens further. On balance, Marston's current discount looks justified."

Related Articles:

• 15 Oct 2009 - Marston's offers free kids meals to celebrate new menu
• 01 Oct 2009 - Travelodge and Marston's join forces
• 05 Aug 2009 - Marston's set to expand despite recession
• 26 May 2009 - Food and beer prove resilient for Marston's

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