Pub chain Marston's has recorded a strong performance in the first half of its financial year on the back of food and drink sales, as it looks ahead to bumper summer months packed with sport, including the Euro Championship.
Marston's, which operates 1,395 pubs across the UK, this morning announced a rise in revenue and profits for the 26 weeks to 30 March. Underlying revenues rose from £407 million to £428.1 million, while profits increased from £43 million to £52.7 million. This performance exceeded market expectations.
Recent sunny weather has provided a major boost to pub sales as customers flock to beer gardens across the country. This positive shift has been particularly welcomed by the hospitality sector, which has been grappling with a difficult cost of living crisis.
The increase in like-for-like sales, which grew by 7.3% over this period, has contributed significantly to Marston's success. In addition, pubs saw a 22% rise in operating profits. The company also reported a reduction in debt and effective cost management, putting itself in a positive position for the second half of the year. With major events such as the European Championships and the Olympics on the horizon, Marston expects to attract millions of Britons to its venues.
Despite the positive trends, Marston's reported a statutory pre-tax loss of £43.5m, compared to £38.1m in the same period last year. This was due to two non-cash items: a £25.8 million increase in liabilities arising from interest rate swaps and a £16 million charge related to the dilution of CMBC's brand and onerous contract terms.
CEO Justin Platt commented: “The first half was positive, with Marston’s delivering strong like-for-like sales growth of 7.3 per cent, outperforming the market and delivering an impressive 22 per cent increase in pub operating profits. We have managed costs well We have made more progress in reducing debt.
Platt expressed optimism about the second half of the year, highlighting the potential of Marston's upgraded pub gardens and popular menu to attract guests during major sporting events. “Looking back at my first few months with Marston's, I'm very excited about the potential that lies ahead. The UK pub market offers great opportunities to increase value for those who can engage and deliver for their guests. With our high-quality properties and guest-obsessed team, we are well placed to capitalize on and deliver Consistent and reliable cash flows that increase value for our shareholders.
Looking ahead, Marston aims to build on its positive trading momentum, and capitalize on the seasonality of its trading, which typically sees the majority of revenues, profits and cash flows generated in the second half of the year. The company plans to increase efficiency, targeting at least £8 million in cost savings, mainly from lower energy and labor costs.
Marston also addressed recent job cuts, saying it had begun an operational program to streamline the business and boost efficiency. One-off headcount related costs, of £0.5 million in the current period and £2.9 million for the 26 weeks ending 30 September 2023, are expected to be short-term and non-recurring. As of 30 March 2024, £3.4 million had been incurred as part of reorganisation, restructuring and relocation costs.
With a promising outlook for the summer and strategic plans to boost efficiencies, Marston's is well positioned to capitalize on the expected increase in bar patrons during major sporting events.