City Pub Group to 'rein in' expansion programme over Brexit uncertainty
Strategic expansion has been driving sales and earnings growth at the City Pub Group, however further expansion is being ‘reined in' over Brexit uncertainty concerns.
Due to political and economic uncertainty in the UK, the group said it will take a "much more prudent and even more selective approach" to acquisitions and focus instead on development, reducing debt and improving the dividend for shareholders until a time where there is more certainty.
Clive Watson, executive chairman of the City Pub Group, said: "Our targeted expansion of high-quality larger pubs with letting rooms has delivered strong progress for the group in the first half. In the face of robust comparatives, we have delivered good like-for-like growth too. As our development sites begin trading during 2020, they will drive our performance onward. Our momentum has continued into the second half with strong sales growth.
"We cannot ignore the uncertainty in the market due primarily to Brexit and the potential impact of a no deal. We are a management team that is focused on the long-term and as such we believe it is prudent for us to rein in our expansion programme until there is more certainty. Instead we will focus on getting our development sites trading, developing our existing estate, reducing our debt and improving our dividends for shareholders. This will further strengthen our position and minimise the impact of any headwinds whilst continuing to deliver significant growth into the future."
In its interim results for the first half of the year, the 26 weeks ending 30 June 2019, the group reported revenue was up 36% to £27.1m, as well as like-for-like sales up 2.6% year on year. It said adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) were up 20% to £3.6m and reported adjusted pre-tax profits of £1.9m (up 19%).
The City Pub Group credits its four new pubs this year and its wet-led focus for earnings and sales growth and says progress has continued into the second half with sales up by 35% over the last 11 weeks.
With a further four projects in development and a continued focus on the existing estate, the board expects the City Pub Group to continue to deliver significant growth for the foreseeable future.
The group operates a predominately freehold estate of 47 wet-led pubs in London, Southern England and Wales.