Profits down at Enterprise as pubs suffer
BRITAIN’S second-biggest pubs company, Enterprise Inns, yesterday blamed consumer belt-tightening, higher costs and competition for lower profits and warned of more woe this year.
Enterprise, which has 7,400 leased and tenanted pubs, said underlying pre-tax profit fell 21 per cent to £208m in the year to the end of September, just below a forecast for £213m.
The firm’s landlords faced lower customer spending, rising overheads, above-inflation rises in duty and price-cutting by rivals, reducing pubs’ average net income by eight per cent.
Enterprise off-loaded 368 poor-performing pubs for £103m during the year and expects to sell more this year to cut total debt of £3.56bn, which has fallen £142m from a year ago.
Chief executive Ted Tuppen said he believed the UK had too many pubs.
“Given the current economic climate and the planned reduction in the size of our pub estate, we are likely to see some further decline in trading profit in the short term,” he said.
Shares in the Solihull, West Midlands-based group have lost nearly three quarters of their value in the past 18 months as investors agonised about trading and the company’s debt. Last night, they fell another eight per cent or 11p to close at 122.4p.
Astaire Securities analyst Mark Brumby said the statement was realistic and signalled further declines in earnings.
“We see trading post the VAT rise next year and in the face of rising unemployment, taxation and interest rates as being extremely challenging,” he said.