Shepherd Neame ‘back on path to recovery’

In a trading update, the company revealed for the 11 weeks from 12 April – when pubs could trade outside only – to Saturday 26 June, managed pubs that were open and trading achieved 84% of 2019 revenue.

Total retail sales, including the 15 central London sites that were closed, were at three fifths (60%) of 2019 levels.

For the period pubs could only serve outdoors (Monday 12 April to Sunday 16 May), open sites achieved 62% of pre-pandemic levels and from Monday 17 May – when pubs could return to inside service – to the year end, open venues achieved 97% of 2019 levels.

The 310-strong operator also reported that since full restrictions eased on Monday 19 July, it has seen a modest rise in sales.

Rent levels

For its tenanted arm, Shepherd Neame saw pubs achieve more than three quarters (77%) of 2019 volume during the 11 weeks from Monday 12 April to Saturday 26 June. Furthermore, in the four weeks of June, tenanted pubs achieved 91% of 2019 beer volumes.

The operator began charging 90% of normal rent from Monday 21 June, following months of charging no rent during lockdowns, and as from Monday 2 August, it will start charging full rent.

For the brewing side of the business, Shepherd Neame obtained new on-trade customers and new listing in the grocery trade and export.

As the trade reopened, total volume in all channels in May and June were up by 8.4% against 2019 and total own beer volumes excluding contract were down by 3.6% for the same period.

However, the brewer and operator did report a loss for the financial year to 26 June but, this was less than originally forecast.

Net debt was at £89.8m – reduced from £92.4m in December 2020. Its banks have relaxed normal covenants through to September 2022 and these have been replaced by a minimum liquidity covenant.

Strong pent-up demand

The trading update also stated the company has sufficient and growing liquidity to restore its financial health over the next 12 to 18 months.

It went on to say while costs are still tightly controlled and the business is being run prudently, the board is increasingly confident of a full recovery and return to the previous growth path and dividend pay outs for shareholders.

Shepherd Neame CEO Jonathan Neame said: “It has been great to be open again and our team members and licensees are delighted to be able to welcome our customers back.

“Although we continue to trade below full capacity, we have benefited from strong pent-up demand. The business is back on the path to recovery and has been cash generative and profitable since reopening.

“Although we naturally have to be cautious in case further restrictions are imposed during the winter months, we are now looking forward and planning beyond the pandemic with some optimism, driven by the rapid return to near normal trading levels in the past few weeks.”