(Adds details on results, capex, Brexit plan, background)
Nov 27 (Reuters) - Pub operator Marston’s Plc reported a fall in full-year underlying pretax profit on Wednesday, hurt by lower food sales, rising labour costs and sluggish consumer spending.
Britain’s hospitality sector has been rocked by several major restaurant chain closures in an overcrowded market, while pubs are battling the cost of a higher minimum wage and subdued consumer spending related to uncertainties surrounding Brexit.
Marston’s, which has sped up the disposal of its pubs to cut debt, said pretax profit fell 2.9% to 101 million pounds ($129.58 million) for the year ended Sept. 28, in line with the company’s expectations.
“We are making good progress with our debt reduction plans and are ahead of schedule in meeting the accelerated 70 million pounds of disposal proceeds which we are targeting in the current year,” Chief Executive Officer Ralph Findlay said.
The company said last month it plans to raise 70 million pounds from selling more pubs in fiscal year 2019-20, up from its previous target of 40 million pounds.
However, the brewer of Lancaster Bomber, Brakspear and Mansfield beers said pub like-for-like sales in the first seven weeks of the new fiscal year were higher compared to the same period a year earlier, and beer performance was in line with expectations.
Marston’s also cut its capital expenditure for 2020 by 40 million pounds and said it has no plans for opening new pubs this year.
That would help reduce debt, which stood at 1.4 billion pounds at the end of fiscal year 2018-19, compared with the company’s market cap of 809.8 million pounds at Tuesday’s close.
The company, which has around 1,500 managed, franchised and leased pubs, has also put Brexit contingency plans in place to prepare for Christmas and New Year, but said “current indications are that the risk of a disorderly Brexit have reduced”.
$1 = 0.7794 pounds Reporting by Tanishaa Nadkar in Bengaluru; Editing by Shounak Dasgupta