Marston's sales up 10% as pubco reduces head office costs

11-Oct-2023 - Last updated on 11-Oct-2023 at 10:30 GMT

Improved outlook: Marston's reports 10.1% sales increase

Pub operator and brewer Marston’s has reported like-for-like sales in the 52 weeks to Saturday 30 September were 10.1% up compared with the same period last year as well as a £5m reduction in head office costs.

Like-for-like sales in the 10 weeks from 23 July this year to 30 September were up 7.7% compared with last year, rising to 12% during the last five weeks of this period.

Marston’s chief executive officer Andrew Andrea said: "Two years ago, we set out our vision and strategy with a clear objective to create a simplified, high quality predominately suburban pub business, with minimal exposure to city centres where demand is more volatile.”

Sales in the West-Midlands based firms managed and franchised pubs were up 11.3% against 2022 levels during this period.

While the trading report stated both food and drinks sales had been “strong” over the 52-weeks, drink sales during this period were behind food sales, attributed to the weather.

Additional efficiencies

Andrea added the group remained “focused on the core pillars of driving guest satisfaction in a great environment served by engaged and focused teams”.

"The benefits of this strategy are now coming through. We are pleased the strong trading momentum which characterised H1 of this year has continued into H2.

“The simplification of the business, together with the extension of the franchise model into our food-led pubs, has enabled us to introduce additional efficiencies, which will improve margins in 2024 and beyond, through improved sales performance and continued cost savings”, he continued.

Furthermore, the report added Marston’s had reduced its “head office headcount” costs by approximately £5m, which was expected to “translate into higher pub operating profitability”.

In addition, the pubco stated it had “fixed” its energy costs for FY0224, providing the company with a “high degree of confidence” for the next financial year.

Improving outlook

Moreover, following the “successful" trialling of its franchise-style model in 19 of its food-led managed pubs earlier this year, Marston’s added it was “on track” for its target of 50 food-led franchised pubs in FY2024.

The chief executive officer also said Marston’s had continued to make “good progress” in reducing its borrowings to below £1bn, including the accelerated disposal of non-core pubs.

As of 30 September this year, the group’s next borrowings stood at £1.185m, £31m below last year and £19m lower than H1, with a targeted debt reduction of between £60m and £70m in FY2024.

During the 52-week period, Marston’s generated £55m in non-core pub disposal proceeds (net of VAT), with around £50m of additional non-core properties set for disposal in FY2024.

Andrea concluded: "An improving outlook in which cost headwinds are abating, together with the actions we have taken this year to drive further efficiencies, leaves us confident Marston's remains well-placed to continue to outperform in the current macroeconomic environment, grow revenue and profitability, as well as deliver improved margin in the year ahead."