City’s eyes on Punch’s efforts to sell underperforming pubs
PUNCH Taverns, one of Scotland’s biggest pub companies, will be pressed by the City this week on the pace of the sell-off of its underperforming outlets amid continuing tough trading for the drinks sector.
The spotlight at Punch, which has more than 300 tenanted pubs in Scotland, will also focus on how successful the company has been in reletting outlets that have been returned to the company in the consumer downturn.
The group, which demerged from its more successful Spirit managed pubs business last summer, said in a trading update last month that same-floorspace net income slid just under 3 per cent in its second trading quarter to 3 March.
This was a deterioration on the 2.1 per cent net income fall over the half year, which Punch chief executive Roger Whiteside put down to soft post-Christmas trading in January and February. A similar picture was also recently reported by rival JD Wetherspoon and the Restaurant Group.
Ahead of the interim results on Thursday, one analyst said: “I think Punch is on track to meet City consensus profit expectations for the full year.
“However, that means much interest will be on the continuing progress of the company’s sale of its non-core pubs which are holding back the sales performance.
“Punch sold over 200 pubs in the first half and the hope is that, despite this difficult climate for the industry, they will say they are on track to meet the target of selling 500 pubs over the full year.”
The sale of underperforming outlets are seen as a key issue for Punch because they still account for about a quarter of underlying earnings at its 4,790-strong estate.
Whiteside will also be quizzed for detail on how many tenants have returned their leases to Punch in the tough trading climate.
“The market will want to know the pace of relettings and, as importantly, flesh on the bone of new investment plans in those pubs to improve earnings,” one analyst said.
City consensus for Punch’s full-year pre-tax profits is for a further decline to £58.2 million from £76m in the previous year and £90m two years ago.
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