- Festive like-for-like sales above 2021 and 2019
- Energy costs hedged out to March 2024
- Full year guidance unchanged
Pubs group Marston’s (MARS) said like-for-like sales over the festive period were 26% higher than 2021 and up 12.9% versus the same trading period pre-Covid.
Over the 16 weeks to 21 January, like-for-like sales were up 12.9% versus 2021 part of which was disrupted by Covid. Breaking out the uninterrupted period showed like-for-like sales up 6.8% in the first eight weeks and up 19.2% in the last eight weeks as trading momentum continued into the holiday season.
The positive festive trading update was welcomed by investors with the shares surging nearly 8% to 42p. This in part reflected relief following the profit warning from Fuller’s (FSTA) last week (23 Jan) after rail strikes hit their Christmas sales.
Marston’s predominantly community estate means its cliental is less reliant on transportation. Total retail sales were up 14% year-on-year and up 7.3% compared with the 2020 fiscal year.
The company’s electricity costs are hedged until the end of September 2023 while its gas price is fixed until the end of March 2025.
WHAT IS MANAGEMENT SAYING?
Chief executive Andree Andrea commented: ‘We have continued to see positive sales momentum through the festive season and into the New Year, with particularly strong demand on the key Christmas and New Year trading days.
‘Marston's pub estate is well-invested, and our geography and proposition lends itself to benefit from underlying consumer trends. Whilst still early in the New Year, trading momentum continues to build, and our primary focus remains to meet our strategic goals of achieving £1 billion sales and reducing our debt to below £1 billion with all the subsequent benefits that both of those milestones will bring to our shareholders.’
EXPERT VIEWS
Leisure analyst Gregg Johnson at Shore Capital reiterated his buy stance on the shares. ‘Overall, we would see today’s update as supportive of our full year pre-tax profit estimate of £52m (EPS: 6.9p), which is predicated on c8% full year retail revenue growth and a £10m contribution from its 40% stake in Carlsberg Marston’s Beer Company (CMBC).’
‘At 41p per share, Marston’s trades on less than half the September 2022 book value. This is towards the bottom of its long-term trading range.’
In the opposite corner with an underweight stance on the shares is Jefferies. ‘We find limited interest from investors in the pubs/restaurants sector currently as investors worry about an impending consumer squeeze.
‘Despite borrowings being largely hedged, we argue that leverage is too high (6.4 times net debt to EBITDA for FY23E) and limits growth capex and/or dividends.’
Marston’s is a running Shares Great Idea.
