Marston's reports £2m electricity price hike
Pub group Marston's has said that, following the company's electricity contract ending in March and with the Ukraine invasion impacting energy prices, its electricity costs are expected to be around £2m higher than previously thought for the second half of this financial year.
With energy cost inflation likely to persist in the short term, Marston's has fixed the group's electricity rates for Winter 2022, covering the six-month period from September 2022 to March 2023, with an incremental cost impact of around £3m in the 2023 financial year. The group's gas price is also fixed until the end of March 2025, with no additional incremental spend anticipated.
In a trading update for the 42 weeks to 23 July 2022, the group reported total like-for-like sales for the period were down 2% against the 2019 financial year, reflecting the impact of the reintroduction of trading restrictions in December and January in the first half.
Total retail sales in the group's managed and franchise pubs returned to 2019 levels, and drinks sales continued to outperform food sales.
Like-for-like sales in the last 16 weeks to 23 July were 1% below 2019, but in the first 12 weeks of this period, sales were slightly ahead. Over the last four weeks, despite drinks sales continuing to be in growth, food sales weakened principally due to the recent spell of very hot weather.
Chief executive Andrew Andrea said: "Since Covid restrictions were lifted, we have been encouraged with the level of sales as we have transitioned to operating on a ‘business as usual' basis. In spite of external economic headwinds, we have not seen any discernible change to customer footfall to date and remain cautiously optimistic that we will continue to see similar levels of customer demand across the summer where we will benefit from our investments in outside space and staycations.
"We continue to focus on our strategic plans and remain on track with our debt reduction strategy. We are making considerable progress with the transition away from our value food Two for One brand which will be complete by the end of September. We have completed 45 of these pub conversions to date and, whilst still early days, initial indications are encouraging with positive customer feedback and improving returns. We remain confident that the changes we are implementing now will deliver a higher quality business for the group over the medium to longer term."