Marston’s plans to scale back expansion to pay off £200m debt

Pub and brewing company Marston’s will scale back its planned expansion in order to pay off some of its £1.2 billion debt pile.

(Photo: Elliot Brown/Flickr)

The Pubco, which currently owns 1,545 managed, franchised and leased pubs nationwide, recorded a 1.4% rise in like-for-like sales in pubs during the 16 weeks to January 2019, but CEO Ralph Findlay said the is “cautious” over the group’s future growth.

Martson’s will focus its attention on pubs with accommodation, while scaling back its current expansion plans to spending £25 million per year on new build properties until 2020.

In addition, the group plans to axe up to £90 million of its non-core assets over the next three years. The cost-cutting measures would leave Marston’s with a net debt of £1.2 billion by 2023, according to the company’s latest trading update.

“We operate in increasingly uncertain times from a political and macro-economic perspective and, as such, we remain cautious about the potential consumer outlook until there is more clarity,” Findlay said.

“However, we are confident of delivering further profitable growth this year, whilst focussing on our strategic priorities of generating cash and delivering our stated £0.2bn debt reduction target between 2020 and 2023. In addition, we are committed to maintaining the dividend at the current level during this period and believe that the combination of these actions will drive long term value for shareholders.”

Like many UK pub chains, Marston’s sales saw stronger growth over the festive period, with sales up by 4.5% over the Christmas fortnight.

In Marston’s wet-led sites, managed and franchised pubs fared better than leased pubs. Sales in the former grew 3.2% in the 16 weeks to January, while leased pubs saw earnings up 1%. Sales in its premium and food-led premises, meanwhile, rose by 0.5% in the same period.

Total beer volumes were up 3.5%.