Shepherd Neame, brewer and owner and operator of 310 pubs in Kent and the south east, has said since the resumption of trading on 12 April the company's cash generation and profits have been ahead of expectations.
In a trading update following the close of its financial year on 26 June, the group said demand has taken a step up from 17 May, when indoor trade was allowed, and continued to benefit from pent-up demand with particularly strong trading at its rural and coastal pubs and hotels.
Retail sales were impacted by the extended closure of 15 Shepherd Neame central London pubs, almost all of which reopened from 19 July, although their trade levels are expected to remain below prior levels for some time to come.
For the 11 weeks of 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.
For the initial period of outdoor trading between 12 April and 16 May, open pubs achieved 62% of 2019 levels and from 17 May, when indoor trading resumed, to the year end, those sites that were open achieved 97% of 2019 levels. Since full restrictions lifted on 19 July the group saw 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, Shepherd Neame's tenanted pubs returned to 90% of normal rent as from 21 June and, as from 2 August, will return to normal rent.
Despite the "encouraging" restart, the company said it will "inevitably" report a loss for the financial year to 26 June, after such lengthy periods of closure, though less than originally forecast.
Shepherd Neame's net debt was £89.8m at the year end, down from £92.4m in December 2020, and the company said it had sufficient and growing liquidity to "restore its financial health" over the next 12 to 18 months. It added that while costs were still tightly controlled and the business run "very prudently", the board was "increasingly confident of a full recovery and a return to the prior growth path and dividend payouts for shareholders".
Jonathan Neame, chief executive of Shepherd Neame, said: "It has been great to be open again, and our team members and licensees are delighted to be able to welcome our customers back. 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 re-opening.
"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."