Trade union launches attack on pubco profit margins

Trade union the GMB has stepped up its attack on the pubcos - claiming that Enterprise Inns has a profit margin nine times that of supermarket giant Tesco.

A study by the union suggests that Enterprise has a profit margin before tax and interest of 57.3p in the pound, compared to Tesco's 5.9p. It also claimed that Punch's profit margin is 35.9p per pound of turnover.

The study was discussed at a meeting yesterday with campaign group Fair Pint, where a strategy to break the tie was also thrashed out.

Paul Kenny GMB general secretary said: "The pubcos are yet another example of financial engineering by the City gone wrong.

"It is high time that the Labour Government put an end to the pubco model for the benefit of consumers and tenants alike."

However a spokesman from Enterprise Inns dismissed the figures as an unfair comparison.

"Enterprise Inns and Tesco are two totally different businesses," he said.

"Trying to draw parallels between them is at best ridiculous and at worst deliberately disingenuous.

"Attempting to make this comparison shows the GMB hasn't got a clue about how the pub industry operates."

City analyst Mark Brumby agreed it was an unfair comparison. "The GMB is comparing apples with oranges here as the cost of rent sold is always going to be low in comparison to goods such as groceries and indeed beer," he said in a briefing note.