Marston's to put 600 pubs on new retail agreements

Marston's said today it plans to increase ten-fold the number of its tenanted and leased pubs operating under its new retail agreement.

The Midlands brewer currently has 63 pubs operating under the arrangement on a trial basis. Under the agreement Marston's exercises greater controls over the individual site to improve its trading profile and bears all costs other than staff wages - the licensee keeping a percentage of the revenue.

Around 600 pubs of its 1,700-leased and tenanted estate will move to the new agreement over the next three years, Ralph Findlay, Marston's chief executive said today.

"The performance of Marston's Pub Company licensees has been consistently better than the market, in part because our relationships have long been based upon openness, transparency, fair rents, a fair share of risks and rewards, and sustainability.

"It is our view however that the pressures on tenanted pubs in particular will continue, and that a different approach can provide both an effective response to market conditions and the opportunity for significantly increased profitability," he added. Marston's said it expected to invest an average of around £50,000 per pub.

One of the targets of the new strategy would be to increase annual profits per pub by £10,000 and "improve retailer stability".

The estate's remaining pubs will continue to run under long-term agreements, with licensees able to buy Marston's beers at the same price as free-trade customers, the group said.

Marston's said it planned to sell "around 60" tenanted and leased pubs in the next 18 months.

Meanwhile the group announced pre-tax profits for the six months to April 3, 2010, up 0.4 per cent mat £27.8m. Turnover rose 0.6 per cent to £309.2m.

Marston's tenanted and leased estate saw like-for-like profits fall 4.5 per cent, reflecting "an improving trend as a consequence of the actions we have taken to stabilise trading in smaller pubs". The majority of pubs in the estate were outperforming the market, it added.

Its managed pub division saw like-for-like sales up 1.4 per cent, including food growth of 2.5 per cent and wet sales up 0.5 per cent.

On the brewing side, Marston's said overall volumes remained in line with last year. Sales rose 8.6 per cent, with operating profits up 1.4 per cent.

Current trading has been positive, Marston's said, with a 1.2 per cent like-for-like sales increase across its managed pub estate in the six weeks to May 15, 2010.

The group said it was on track with its strategy of building 60 large pub-restaurants over the next three years, predicting it would open 15 new build pubs this financial year, 20 in 2011 and 25 in 2012.

Results at a glance

Turnover: £309.2m (up 0.6 per cent)

Operating profit*: £65.5m (up 0.2 per cent)

Pre-tax profit*: £27.8m (up 0.4 per cent)

Earnings per share: 3.6p (up 2.9 per cent)

Interim dividend: 2.1p

*pre-exceptionals