Spirit Pub Company (“Spirit”) has issued its trading update for the third quarter of the current financial year.
Highlights
- Continued sales growth in the managed estate
- Invested in 177 Managed pubs in this financial year to date
- New Leased management team making progress
- On track to meet full year expectations
Mike Tye, Chief Executive, commented:
“We have delivered another quarter of good growth against a very strong trading period last year. Continued innovation and investment in our managed estate, people and brands has enabled us to once again to significantly outperform the market*. Our focus is now on maximising sales in our managed pubs during what promises to be a busy summer and stabilising performance in our leased estate. Whilst the consumer environment remains uncertain, we are confident in making further progress this year and remain on track to deliver our full year expectations.”
*Source: Coffer Peach Business Tracker
Managed
- Like-for-like sales +3.7% (+5.0% 40 weeks)
- Food Sales +6.8% (+7.1% 40 weeks)
- Drink Sales +1.1% (+3.9% 40 weeks)
The managed pubs division has delivered another quarter of good growth against tough prior year comparatives, with drink sales growth especially impacted by the warm weather and additional bank holiday in April 2011. It is significantly outperforming the market* and Spirit remains pleased by the continuation of strong food sales growth which reflects the ongoing evolution of the offer across the managed brands.
Investment across the managed estate is progressing as planned, with a further 21 pubs in the quarter taking the total for the financial year to date to 177 and the total proportion of the managed estate invested and branded to 79%. There will be minimal investment activity in the final quarter as the focus is now on maximising the profitability of pubs during what is expected to be a strong trading period.
Infrastructure enhancement continues with 236 pubs now operating on the new platform which, alongside the new EPOS systems, also incorporates new modules for stock, cash and labour management.
*Source: Coffer Peach Business Tracker
Leased
- Like-for-like net income -8.0% (-5.3% 40 weeks)
Having taken full control of the leased estate at the start of the quarter, the new management team is making progress. The proportion of pubs on a substantive agreement has already increased by 3% from the half year to 87%, and discounts and concessions to licensees have been significantly reduced. As expected, the process of stabilising income is taking time. It has been a challenging quarter set against strong trading comparatives and the impact of current year rent rebasing.
A full leased estate review has been completed which has identified up to 100 under performing pubs that will be divested, of which so far 27 have already been disposed. 10 leased pubs have now been converted to managed brands and the performance of these conversions will be monitored closely before deciding on the pace of this programme in the next financial year. Work also continues to develop more innovative operating agreements.