Punch targets are food for thought

Britain's biggest pubs group, Punch Taverns, is on track to meet full-year targets after food-led outlets helped offset the impact of freezing weather on sales in recent weeks.

The group, which has more than 6,700 sites across the UK, yesterday reported like-for-like sales growth of 2.2 per cent in its managed pubs and said financial support for outlets in its leasehold estate had stabilised at around 2 million a month.

Recent investment at Chef & Brewer and Fayre & Square meant food sales in its managed division rose by 2.6 per cent in the 16 weeks to 11 December.

Punch has hundreds of well-known watering holes in Scotland, including Doctors, the Malt Shovel and Beehive Inn in Edinburgh and the Cairns Bar in Glasgow.

Yesterday's trading update noted that disruption to footfall caused by the recent cold snap had knocked about one percentage point from the group's managed sales performance.

The news comes as chief executive Ian Dyson, who joined the company in September from Marks & Spencer, prepares to unveil a review of strategy that could see the company call time on many of its pubs.

It has been reported that he may hand the tenanted estate – pubs Punch owns but leases to independent landlords – to the group's bondholders in a radical move to tackle the company's 3 billion debt pile.

The plan would allow the group to focus on the remaining 800 pubs directly managed by it, including the Chef & Brewer chain. Dyson is expected to give an update on the review in the first quarter of next year.

He said yesterday: "The actions taken to strengthen both the leased and managed businesses have resulted in an improved trading performance in the first 16 weeks of the financial year.

"We are now looking to build on this momentum by focusing on further operational improvement across the business."

Douglas Jack, an analyst at brokerage Numis Securities, said: "We are holding our forecasts which assume managed pub like-for-like sales rise by 2 per cent and that leased like-for-like earnings fall by 5 per cent with average profits flat.

"The former should be supported by refurbishments in the first quarter and the latter is expected to benefit from an improving trend as the year progresses."

Numis is forecasting pre-tax profits of 127.2m, against 130.8m for the previous year.

Last month, Punch was hit by news that its finance director, Phil Dutton, was to step down from the board. It is understood his departure was by mutual agreement.