Improvements have raised the bar against gloomy forecasts for the pub sector
Marston’s brews up much needed boost from World Cup and heatwave
- Sales at drinks-led taverns rise 5.0% in the past 16 weeks with improvement also seen at Destination and Premium pubs
- Full year earnings guidance and progressive dividend policy confirmed
- We continue to recommend Marston’s as a ‘buy’ for medium to high risk investors seeking income
Today’s third quarter trading update from pub and brewing group Marston’s showed that it had benefited from the combination of the World Cup and the extended period of hot summer weather. Sales in the drinks-led pubs were up 3.8% in the first 42 weeks of the year, with a 5.0% improvement in the last 16 weeks. The food-orientated Destination and Premium pubs also saw some benefit with like-for-like sales down 1.5% but easing to a 1.2% decline in the last 16 weeks. The brewing side of the business, which has recently acquired Charles Wells, has seen a 61% leap in volumes so far in the financial year.
Investors should appreciate that Marston’s expansion plans remain on track and it reiterated its expectations for growth in underlying earnings for the full year. The market welcomed the news with a 1% rise in the shares in early trading.
The results provide some welcome news for investors and defy gloomy forecasts for the pub sector this year. We therefore maintain our 'Buy' recommendation due to the group's continued expansion and progressive dividend policy but the uncertainty around the UK economic outlook in the short term means this remains a contrarian stock and more suitable for medium to high risk investors.
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