Shepherd Neame ‘back on the path to recovery’
The Kent-based group, which operates an 310-strong pub estate, says it continues to benefit from pent-up demand for pub experiences and its cash generation and profits have been ahead of expectations.
For the 11 weeks from 12 April to 26 June, managed pubs that were open and trading achieved 84% of their 2019 revenue and total retail sales, including those closed pubs in London, were 60% of 2019 levels.
Between 12 April and 16 May, when hospitality was restricted to outdoor service only, open pubs achieved 62% of 2019 levels. From 17 May, when indoor trading resumed, those sites that were open achieved 97% of 2019 levels.
Since full restrictions lifted on 19 July Shepherd Neame reports a 'modest increase' in sales.
For the 11 weeks from 12 April to 26 June, tenanted pubs achieved 77% of their 2019 volume. For the four weeks of June, they achieved 91% of 2019 beer volumes. After charging no rent for all the weeks of lockdown, the tenanted estate returned to 90% of normal rent as from 21 June and, as from 2 August, will return to normal rent.
Rural and coastal pubs and hotels in particular are benefitting from their locations and outside space.
Overall retail sales have been impacted by the extended closure of 15 Central London pubs, which now mostly re-opened, although trade levels are expected to remain below prior levels for some time.
Despite the encouraging restart, the company expects to report a loss for the financial year to 26 June, after lengthy periods of closure - though less now than originally forecast.
Net debt has remained under control, and at the year-end was £89.8m - reduced from £92.4m in December 2020.
The company said it has sufficient and growing liquidity to restore its financial health over the next 12-18 months, and was increasingly confident of a full recovery and a return to the prior growth path and dividend pay-outs for shareholders.
“It has been great to be open again, and our team members and licensees are delighted to be able to welcome our customers back," says Jonathan Neame, CEO of Shepherd Neame.
"Although we continue to trade below full capacity, we have benefitted from strong pent-up demand.
"The business is back on the path to recovery and has been cash generative and profitable since reopening.
“Although we naturally have to be cautious in case further restrictions are imposed during the winter months, we are now looking forward and planning beyond the pandemic with some optimism, driven by the rapid return to near normal trading levels in the past few weeks.”
