The brewer and operator of 296 pubs in Kent and the south-east said of its preliminary results: “Despite challenging economic conditions, we achieved record revenues and an increase in underlying profits to the end of June 2023.
“Consumer demand was strong throughout the year but significant inflationary pressure has increased costs across the business.”
Its results showed revenue for the year grew by 9.7% to a record £166.3m (2022: £151.5m), underlying profit before tax grew by 3.8% to £7.6m (2022: £7.3m) and statutory profit before tax was £4.9m (2022: £7.4m).
Other figures showed it was a year of increased investment at £17.2m (2022: £5.4m) while the company also put long-term financing in place with 65% of debt fixed at favourable rates.
Shepherd Neame reported it had transferred six tenanted pubs to retail and acquired four pubs and sold eight properties.
Like-for-like sales rise
In its retail pubs division – which represents 72 sites – total life-for-like (lfl) sales rose 12.9% versus 2022 with drinks sales taking the plaudits as it went up 22.4% v 2022 and food rose 3.1% while accommodation sales fell 4.2%.
In its 217 tenanted pubs, lfl income went up by 3.9% versus 2022 and the average pub’s income enjoyed a 3.4% lift.
CEO Neame said: “Demand has been strong all year with recent trade in our pubs encouraging.
“We have faced considerable inflationary challenges in the past year but these are now easing.
“We have an excellent pub estate, which has been performing in line with the best in the sector. We have a loyal customer base, a high profile within the communities we serve and we have an ambitious investment programme ahead.
“The turmoil of the past few years is now settling and the outlook is positive. We have much to look forward to. The balance sheet remains strong and the business has momentum in our pipeline of investment. We are confident we have the team and skills to deliver good returns for our shareholders over the long term.”
Series of crises
On the future, he added: “The hospitality sector has faced an unprecedented series of crises in the last three years. We still have known cost increases to absorb, but the dust is settling, the outlook is more positive and the fundamentals of the business are good.
“Consumer spending has remained resilient all year, better than many had expected, and better than many other parts of the retail and consumer economy. People are prioritising going out over other types of expenditure.
“Pubs are generally performing better than restaurants. Premium and neighbourhood pubs are performing well. We have an excellent pub estate with considerable potential, a loyal customer base, and a high profile within the individual communities we serve.”
For the 13 weeks to 23 September 2023, lfl sales in its retail pubs were up 5.6% versus the 2023 financial year. For the nine weeks to 26 August 2023, same outlet like-for-like income in its tenanted pubs was up 3.0% vs 2023. Total beer volumes were down 10.3% vs 2023 while own-brewed beer volume fell 15.9%.
Neame concluded: “We have much to look forward to. The balance sheet remains strong and the business has momentum in our pipeline of investment. We are confident we have the team and skills to deliver good returns for our shareholders over the long term.”