By Radhika Anilkumar
(Reuters) -British pub group Marston’s said on Wednesday operating profitability should improve beyond its initial expectations this financial year after it reduced headcount at its head office.
The Wolverhampton-based company, which operates some 1,415 pubs and bars across England, Scotland and Wales, said in a trading update that it was aiming for its operating profit margin to improve by at least 200 basis points over two to three years.
Of this, 50 basis points has been achieved through cost reductions, including the cutting of headcount costs by about 5 million pounds.
Marston’s added that it had fixed its energy costs for the year that began Oct.
1 and has secured a significant portion of its food and drinks costs, giving it confidence about its financial outlook.
Its operating profit margin for the year just ended will be disclosed when it reports earnings in December.
Its shares initially surged 4% in morning trade but were later trading down 3%.
In the past year, Marston’s like-for-like sales rose 10.1%.
“We do have limited exposures to city centres and what the numbers show is that over the last year, (suburban) businesses are incredibly resilient, Chief Executive Andrew Andrea said in an interview with Reuters.
The pub chain, which has not declared a dividend since 2020 due to tough economic conditions, raised it debt reduction target this year to 60-70 million pounds ($74-$86 million) in 2024 from its earlier range of 50-60 million pounds.
In 2023, Marston’s disposed about 55 million pounds of non-core pubs and expects around 50 million pounds of additional non-core disposal in 2024.
Peer J D Wetherspoon, which prices its food and beverages lower than average pubs, returned to annual profit last week.
Fellow pub group Mitchells & Butlers has also reported a rise in sales helped by resilient demand.
($1 = 0.8143 pounds)
(Reporting by Radhika Anilkumar in Bengaluru; Editing by Subhranshu Sahu and Edwina Gibbs)
