Marston's reports 1.2% rise in like-for-like sales

Like-for-like sales in the 15 weeks to 12 January, which excluded the recent snow, were 2.1% ahead of last year, including like-for-like food sales growth of 3.5% and like-for-like wet sales growth of 1%. In the seven weeks to 12 January, like-for-likes were up 2.2%, against a growth of 8% in the same period last year.

Marston’s said: “We were encouraged by our trading performance during the Christmas and New Year period. Profitability is in line with our expectations and we continue to make good progress in each of our trading segments despite the broader economic challenges.”

The company added: “Trading over the festive period was strong including growth of 5.8% in the key three week trading period to 5 January and 10% on Christmas Day. Operating margins are slightly ahead of last year and our plans for building new pub-restaurants in the current financial year remain on track.”

Marston’s said profits continue to grow in its tenanted and franchised pubs, with profits for the 16 week period estimated to be c2% above last year, “reflecting the continuing success of our franchise model, now operating in around 550 pubs, and stability in the traditional tenanted estate”.

In brewing, profits are in line with our expectations. “Our brand performance has been very strong and ahead of the market, with own-brewed beer volumes 5% above last year driven by significant growth in the off-trade.”

Net debt and cash flow are also in line with our expectations, the firm said.

Ralph Findlay, chief executive, said: “The results for the year to date are further evidence that our strategy is appropriate for the current environment and is generating consistent and encouraging results. We expect economic pressures to continue to constrain consumer confidence, and see no evidence that the Government recognises the damage being caused to pubs by high taxation and over-regulation.

“Nevertheless, we are confident of making further progress towards our objectives of sustainable growth, higher return on capital and reduced leverage.”

Douglas Jack at Numis said: “Marston’s Q1 IMS is in line, with trading being positive in all three divisions despite the last week of snow taking 1% off both managed LFL sales and tenanted profits. We are holding our above-consensus forecasts, which are supported by an underlying trend (ex-snow) that is ahead of expectations as well as much easier comparatives in Q2-4.

“Despite tough recent conditions, Marston’s is still trading in line with our forecasts PBT (£96.5m; consensus £94.9m), but we believe a sound strategy and much easier comparatives in Q2-4 leave the risk to our forecasts on the upside. The shares have re-rated to 9.1x EV/EBITDA, a discount to Greene King’s 9.6x.”