Pub operator Marston's Plc has reported a fall in full-year underlying pre-tax profit, hurt by lower food sales, rising labour costs and sluggish consumer spending.
Britain's hospitality sector has been rocked by several major restaurant chain closures in an overcrowded market, while pubs are battling the cost of a higher minimum wage and subdued consumer spending related to uncertainties surrounding Brexit.
Marston's, which has sped up the disposal of its pubs to cut debt, said that its pre-tax profit fell 2.9% to £101 million for the year that ended on September 28, in line with the company's expectations.
"We are making good progress with our debt reduction plans and are ahead of schedule in meeting the accelerated £70 million of disposal proceeds which we are targeting in the current year," CEO Ralph Findlay said.
Last month, the company said that it plans to raise £70 million from selling more pubs in fiscal year 2019-20, up from its previous target of £40 million.
However, the brewer of Lancaster Bomber, Brakspear and Mansfield beers said that pub like-for-like sales in the first seven weeks of the new fiscal year were higher compared to the same period a year earlier, and beer performance was in line with expectations.
Capital Expenditure Cut
Marston's also cut its capital expenditure for 2020 by £40 million and said that it has no plans for opening new pubs this year.
That would help reduce debt, which stood at £1.4 billion at the end of fiscal year 2018-19.
The company, which has approximately 1,500 managed, franchised and leased pubs, has also put Brexit contingency plans in place to prepare for Christmas and New Year, but said that "current indications are that the risk of a disorderly Brexit have reduced".
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