Ifa Magazine Marston’s third quarter growth slows in face of tough com…

– LFL sales in Q3 up 1.3%- LFL sales in 41 weeks up 4.1%- Neutral World Cup effect
Like-for-like sales frothed higher at Marston’s in the third quarter, but at a slower pace, as had been expected due to very tough comparative numbers the prior year.
With a broadly neutral effect from the World Cup, with strong sales growth in the off-trade and higher drinks sales in pubs offset by weaker food performance, the company still made progress.
In its Destination and Premium venues, like-for-like (LFL) sales were up by roughly 1.3% in the 15-week third quarter against tough comparative numbers, resulting in a 4.1% LFL gain for the 41 week period to July 19th, including LFL food sales growth of 4.2% and LFL wet sales growth of 3.5%.
Operating margins in these venues was slightly above the previous year and management said the group remained on track to complete 27 new-build pub restaurants in the current financial year.
Analysts at Numis noted that, despite the tough comparatives, Marston’s is continuing to outperform the market outside London, where almost all its estate is located.
In Taverns, LFL sales for the 41 week period were 3% ahead of last year, with the franchise business continuing to perform strongly from around 550 pubs. In Leased, LFL profits are estimated to be up 3% compared to last year.
In Brewing, own-brewed beer volumes were up around 1% compared to last year including 10% growth in off-trade volumes during the World Cup.
Chief Executive Ralph Findlay said: ‘We have continued to make good progress in implementing our strategic priorities with our focus on investment in new pub-restaurants, the expansion of franchise and the continued development of our premium beer portfolio all contributing to our growth targets.
‘We remain confident of achieving our expectations for the full year.’
With the company’s solid dividend yield, Numis was bullish on the shares. Analyst Douglas Jack said that with only 1% price increases needed to mitigate cost inflation in 2015, he believes Marston’s should generate double-digit growth in 2015 and 2016.
‘Over this period, returns should continue to rise, leverage should fall and managed/franchised profits should rise to 85% of pub profits.’
Shares in the company were up 0.4% to 144.8p at 09:35 on Thursday.

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