- Strong festive trading with like-for-like sales up 9.6%
- Total sales for 16-weeks to 20 January up 8.8%
- Resilient growth reflects appeal of suburban pubs
Pubs and hotels group Marston’s (MARS) released a brief but upbeat trading update on Tuesday covering the 16-weeks to 20 January.
Total sales for managed and franchised pubs increased 8.1% reflecting ‘strong’ festive trading. Like-for-like sales accelerated throughout the period, gaining 7.4% in the first nine weeks and 8.4% in the following seven weeks.
Over the key festive days of Christmas Eve, Christmas Day, Boxing Day and New Year’s Eve, like-for-like sales growth was even stronger registering a 9.6% gain.
Investors have become used to seeing a continuing rebound for leisure and hospitality companies over the last year and perhaps unsurprisingly the shares were unmoved, trading down 0.4% to 33.25p.
WHAT DID THE COMPANY SAY?
It is still early days for incoming chief executive Justin Platt who started his new post on 5 January.
Platt commented: ‘I am delighted to have joined Marston's and am excited about the opportunity ahead. This is a great business and, whilst still early days, I've been impressed by the dedication, talent, and expertise of the team.
‘It has been an encouraging start to the year. This, together with an improving outlook in which inflationary headwinds are broadly abating, and the actions we are taking to operate more efficiently and rebuild margins, position Marston's well for the year ahead.’
EXPERT VIEWS
Investment director at AJ Bell, Russ Mould said: ‘Marston’s is the latest hospitality company to toast a good Christmas, suggesting people might have prioritised a night out over a trip to the shops during the festive period.
‘With costs coming down, a sector which has endured an extremely difficult time over the last four years is gradually picking itself off the floor.’
Leisure analyst Greg Johnson at Shore Capital noted that strong Christmas trading was ahead of the market and tracking ‘comfortably ahead’ of his full year assumptions.
‘The performance in the first 16 weeks compares with our (unchanged) full year estimates for LFL growth of 4.5%, although comparatives become more challenging in the second half as last year’s inflation-led price rises annualise.
‘Marston’s trades on an FY24F PER of just 5x and a circa 65% discount to net asset value. The low valuation, in our view, reflecting the elevated headline debt metrics.
‘With current trading resilient, ongoing margin improvement and deleveraging targets, we see continue to see the valuation normalising overtime,’ said Johnson.
Disclaimer: Financial services company AJ Bell referenced in the article owns Shares magazine. The author of the article (Martin Gamble) and the editor of the article (x) own shares in AJ Bell.
