Spirit Pub group toasts a summer of success

One of the UK’s biggest pub chains has topped up the City’s profit forecasts after a better-than-expected summer for food and drink sales.

Spirit Pub Company, whose brands include Chef & Brewer, Fayre & Square and Flaming Grill, said revenues were 2.1 per cent higher on a like-for-like basis in the 12 weeks to August 16, leading to growth of 4.4 per cent across its financial year.

Chief executive Mike Tye said the performance in the quarter was strong, particularly as market conditions remained challenging and the company faced testing comparatives following good summer weather last year.

He added: “We remain confident in the long-term outlook for the business and expect full year results to be ahead of market expectations.”

Spirit shares were 3 per cent higher following the guidance, which prompted analysts at Shore Capital Stockbrokers to raise their forecasts for profits to around £60m in the year to August 16, from £56.8m previously.

Spirit has more than 1,200 pubs across the country following its demerger from Punch Taverns in 2011.

The managed estate comprises more than 750 sites and continues to benefit from a market-beating performance.

Food sales were 2 per cent higher on an underlying basis in the most recent quarter, while drink sales gained 2.3 per cent on a year earlier.

Spirit’s leased pub estate, which is made up of around 450 outlets, grew net income by 4.8 per cent in the 12-week period.

Leisure industry analyst Mark Brumby, of Langton Capital, said: “The numbers are good and, even with comparatives toughening, the group has managed to convey the feeling that momentum is building.

“The pub sector has arguably suffered more than most in the messy aftermath of the financial crash and, with UK consumer spending becoming healthier, Spirit may be positioning itself to benefit from a more positive trading environment.”

Analysts at Numis Securities said that the “increasing visibility on like-for-like profit growth, high cash returns, faster expansion and net debt reduction (growing cash reserves) should bring the re-rating the company deserves”.