REG - Marston's Plc - Trading update for the 52 weeks to 30 Sep 2023

Marston'sAnnouncement

11/10/2023 07:15

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RNS Number : 7028P  Marston's PLC  11 October 2023

 

 

                                     11
October 2023

 

MARSTON'S PLC

('Marston's' or 'the Group')

 

Trading update for the 52 weeks to 30 September 2023

 

Marston's PLC issues the following trading update for the 52 weeks to 30
September 2023.

 

Trading

All sales comparisons are compared to the same period in FY2022.

Total retail sales in the Group's managed and franchised pubs for the 52-week
period were +11.3% on last year.

 

Like-for-like sales for the 52-week period were +10.1% vs FY2022. Both drink
sales and food sales have been strong, demonstrating the resilience and appeal
of our predominantly suburban pub estate.

 

Like-for-like sales in the 10 weeks from 23 July 2023 to 30 September 2023
were +7.7% vs FY2022, reflecting the well-documented wetter weather over the
July and August summer months. Drink sales in this period were behind food
sales, principally due to the weather. The last five weeks like-for-like sales
were +12.0%, providing strong momentum into the new financial year, with both
food and drink sales in strong growth.

 

Our strategy continues to be centred upon delivering affordable pub
experiences for our guests in a quality environment, both inside and out. The
level of customer demand remains encouraging, and we have continued to make
positive progress on guest satisfaction measures over the year.

 

As we set out in the Interim Results in May and July trading update, we
successfully trialled our franchise-style model in 19 of our food-led managed
pubs to complement the 714 wet-led pubs operated under this model.  We are
very pleased with the result of the pilot to date, with sales growth
significantly exceeding that of our broader food business. We are on track for
the target of 50 food-led franchised pubs in FY2024.

 

Looking forward, the combination of our strategy and the principally suburban
location of our pub portfolio positions us well to withstand the challenging
consumer environment, and the actions to dispose of non-core pubs ensures we
have a portfolio of well-invested pubs which will to continue to deliver
high-quality earnings and sustainable future growth.

 

Cost Outlook

 

As previously guided, we have fixed our energy costs for FY2024 and have
secured a significant proportion of our food and drink costs for the year,
providing us with a high degree of confidence for the next financial year.

In addition, as a consequence of pursuing the operational strategy of
simplifying the business and driving efficiencies, and following a review of
the business structure over the summer, we have reduced head office headcount
costs by approximately £5 million, the majority of which will benefit FY2024
and subsequent years. This cost reduction is expected to translate into higher
pub operating profitability than was previously anticipated.

Over the medium term we are focused on continuing to improve efficiencies
across the business to further enhance our operating profit margins and are
targeting an improvement of at least 200 basis points to these margins over
the next 2-3 years, of which 50 basis points is achieved through the cost
reduction described above. Further detail will be set out in the Preliminary
Results in December.

Cashflow and Financing

 

Net borrowings (excluding IFRS16 commitments) as at 30 September were £1,185
million, £31 million below last year and £19 million lower than H1. We are
targeting debt reduction of £60-70 million in FY2024.

 

During the year we generated £55 million of non-core pub disposal proceeds
(net of VAT). We have concluded a further strategic assessment of assets and
in FY2024 we expect to dispose of around £50 million of additional non-core
properties.

 

Our borrowing is largely long-dated and asset-backed. 93% of our borrowings
are hedged and therefore not at risk of changes in interest rate movements
that may occur during the year.

 

Commenting, Andrew Andrea, Chief Executive Officer, 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.
Operationally, we remain focussed on the core pillars of driving guest
satisfaction in a great environment served by engaged and focussed teams,
which remains relevant despite the macro challenges facing the consumer.

 

"The benefits of this strategy are now coming through. We are pleased that the
strong trading momentum which characterised H1 of this year has continued into
H2, culminating in a 12% like for like performance most recently.  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 into the business, which will improve margins in 2024 and beyond,
through improved sales performance and continued cost savings.

 

"We continue to make good progress across our key medium term strategic goal
of reducing the Group's borrowings to below £1bn, including the accelerated
disposal of non-core pubs.

 

"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 that 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."

 

Forthcoming Events

 

Please find below the forthcoming reporting dates for Marston's, which are
also available on the investor calendar on our website -
www.marstonspubs.co.uk/investors (http://www.marstonspubs.co.uk/investors)

 

 2023 Preliminary Results  5 December 2023

 

ENQUIRIES:

 Marston's PLC            Tel: 01902 329516                  Instinctif Partners         Tel: 020 7457 2010/2005
 Andrew Andrea,    Chief Executive Officer                   Justine Warren
 Hayleigh Lupino,   Chief Financial                          Matthew Smallwood
 Officer

                                                             Joe Quinlan

 

 

NOTES TO EDITORS

·      Marston's is a leading pub operator with a 40% holding in
Carlsberg Marston's Brewing Company

·      It operates an estate of 1,415 pubs situated nationally,
comprising managed, franchised and leased pubs

·      Marston's employs around 11,000 people

 

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