Fuller Smith & Turner, the London-listed pub chain, has reported a robust recovery with sales growth of 5.3 per cent in the first 16 weeks of the financial year, bolstered by major events such as the Euro football championships. The company had previously announced an 11 per cent rise in like-for-like sales for the 52 weeks to 30th March.
"With inflationary pressures easing, our margins are recovering," stated Fuller's.
Earlier this year, the pub chain sold 37 of its locations in the South East of England to Admiral Taverns, a deal that completed last month and brought in £18.3m in cash for Fuller's. Additionally, the Mad Hatter in Southwark was sold for £20m,
"[The sales] leave us well positioned to take advantage of appropriate acquisition opportunities", the company said. These transactions reduced Fuller's net debt from £133m to £92m.
Simon Emeny, chief executive of Fuller's, expressed his delight at the continued sales growth momentum, particularly against the backdrop of easing inflation. He said: "I am delighted to see our sales growth momentum continue, particularly against the backdrop of easing inflation, which will help us to grow margins and profit, as well as revenue. We have had a strong start to the financial year, and we look forward to the opportunities the future will bring."
However, analysts at Peel Hunt warned that "although inflationary pressure has been easing, another large increase in labour costs has been signalled by the new government at a time when some customers might be tiring of price rises."
Analysts, however, remain hopeful and have increased their target share price for Fuller's from 750p to 725p.
Emeny also urged Prime Minister Keir Starmer to "stand by his commitment to overhaul our archaic business rates system."
"The Labour Party has a clearly stated objective to grow the economy and the hospitality sector can be an excellent engine to help deliver that growth," he commented.
Typically, a company will pay business rates equivalent to 50 per cent of their annual rent, although business rate relief for retail, leisure and hospitality firms has been extended throughout the 2023/2024 financial year to support these sectors in their economic recovery.
Currently, it is set at 75 per cent (subject to a £110,000 cash cap).
Labour has committed to replacing business rates with a "new system of business property taxation", which "rebalances the burden and levels the playing field between our high streets and online giants."
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