Shepherd Neame to sell 35 bottom end pubs in estate re-jig

Kent brewer and pub operator Shepherd Neame is looking to sell nearly 10 per cent of its estate - 35 sites - to focus on its better performing outlets.

Announcing its annual results today the brewer said that while good quality pubs, whether tenanted or managed, were performing well, trading in some smaller pubs had declined "significantly".

The decline in the bottom 10 per cent of its pubs "impacted our overall performance" and a sale programme was now underway to sell up to 35 pubs over the next two to three years "according to market conditions".

The group said 13 properties had already been sold or were under contract to be sold for a total of £3.4m.

On trading in the year to June 27, 2009, Shepherd Neame said turnover rose 7.7 per cent to £109.5m, but high raw material, production and overhead costs resulted in operating profits sliding 12.7 per cent to £9.5m.

Operating margins fell from 12.3 per cent to 8.7 per cent, although the brewer said it expected business costs to fall in the current financial year.

Shepherd Neame's 49 managed pubs saw sales up 1.6 per cent, with the brewer's 331 tenanted pubs seeing sales revenue up 0.4 per cent.

Beer volumes were up 6.3 per cent, with lager brand Asahi Super Dry the "star performer".

Shepherd Neame said sales of its core Spitfire brand were flat during the year, with growth in the off-trade being countered by a decline in cask sales as national customers "traded down".

August saw Shepherd Neame reduce the strength of Spitfire to 4.2 per cent from 4.5 per cent "to reposition the brand to sit alongside other premium ales".

Despite the tough economic environment current trading was "encouraging", the group said. Like-for-like retail revenue up 2.7 per cent and beer volumes were growing, especially bottled ales, aided by a new bottling line.