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The Guardian - UK
The Guardian - UK
Mark Sweney

Fuller’s pub chain issues profit warning, blaming rail strikes

Ye Olde Mitre pub just off Hatton Garden, London
Fuller’s has more than 400 pubs, mainly in London and south-east England. Photograph: Stuart Ayton/Alamy

The pub group Fuller, Smith & Turner has issued a profit warning, blaming months of train strikes for a £4m slump in sales including a plunge in festive season trade.

Fuller’s, which has more than 400 pubs, mainly in London and south-east England, said that since the start of October industrial action on the rail network had cost the business £4m in sales.

As a consequence, the group said profits would now come in below market expectations when it reports results for the year to April in the summer.

Sales for the crucial four-week Christmas and new year period were up 38% on the previous year, when the hospitality industry was crippled by restrictions relating to spread of the Omicron variant. However, Fuller’s said the run of strikes by various rail unions in December and January meant sales were down 5% on the same period in 2019, before Covid.

“While ongoing strike action will dampen sales, demand from customers remains good and we are optimistic that 2023 will deliver further sales growth through a busy calendar of events, and as office workers and tourists continue to return to the capital,” it said.

Shares in the 178-year-old company, which sold its brewery business including its flagship London Pride ale to the Japanese firm Asahi for £250m in 2019, slumped more than 7% in early trading, making it the biggest faller among FTSE companies.

However, the group said underlying sales momentum was heading in the right direction, up a fifth year on year in the 43 weeks to 21 January, and down just 3% on the same period in its 2019-20 financial year.

“While it is frustrating that the train strikes have set back our reported sales and earnings, it is reassuring that we are achieving our anticipated sales trajectory in periods unaffected by strikes,” said the chief executive, Simon Emeny, who has run the group since 2013.

However, he also warned that the business continued to operate in a “high-inflation environment” – currently running at 10.5% – which was continuing to affect the group’s operating costs and margins.

“While some of these costs may be temporary in nature, others – such as the national living wage increase – are more permanent and we are focused on taking action to mitigate these costs wherever we can,” Emeny said.

Fuller’s directly runs 208 pubs and inns and has a further 175 tenanted properties, with 44% of its sites located within the M25 ring road around London.

Russ Mould, the investment director at AJ Bell, said: “There is a chance of catching up with some of the lost earnings later this year. The King’s coronation in May will add another bank holiday to the calendar and give the public a reason to get out of the house and celebrate … but beyond that event, the pub company will be hoping for lots of sunny weather in 2023 so that its beer gardens are full.”

Last week, Revolution Bars Group had 20% wiped from its stock market value after it issued a profit warning, saying rail strikes had hurt Christmas sales at its 90 venues.

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