Fuller’s toasts boost euro as slowing inflation lifts margins

Fuller, Smith & Turner has reported a strong start to its financial year, with the pub group toasting sales growth and improving margins.

The pub and hotel operator, which runs 332 venues across the south of England, saw its like-for-like turnover rise 5.3 per cent in the 16 weeks ending July 20.

This period coincided with Euro 2024, which provided a much-needed boost to a hospitality industry struggling with high costs and subdued consumer spending.

Just before the final between England and Spain, trade body UKHospitality estimated that the country’s pubs, bars and restaurants would benefit from £800m in additional sales during the tournament.

Fuller’s, whose brewing operations were sold to Japanese beer maker Asahi in 2019, said rising sales and “easing” inflation have led to a “recovery” in margins.

The London-based group also bolstered its balance sheet with the sale of The Mad Hatter pub in Southwark for £20m and 37 pubs to Admiral Taverns for £18.3m.

It said these sales reduced its underlying net debt to £92m and improved its ability to pursue potential acquisitions and fund a share buyback.

Simon Emeny, Fuller’s chief executive, commented: ‘I am delighted to see our sales growth momentum continue, particularly in the context of slowing inflation, which will help us to grow margins and profits as well as revenue.

He added: “We have had a strong start to the financial year and look forward to the opportunities that lie ahead.”

Emeny also called on Prime Minister Sir Keir Starmer to reform the UK’s “archaic” business rates regime to support the hospitality industry and economic growth.

He said: “The Labour Party has a clearly stated objective of growing the economy and the hospitality sector can be an excellent engine to help achieve that growth.”

Many pub owners want the business rates system to be significantly overhauled as the current one squeezes margins and puts struggling venues at greater risk of closure.

A study shows 769 pub companies in the UK will enter insolvency in 2023, the highest number in a decade and around 50 per cent more than the previous year, according to accountancy firm Price Bailey.

In his final autumn statement last November, former Chancellor of the Exchequer Jeremy Hunt announced a one-year extension to the 75 per cent rate relief.

However, many hospitality businesses reacted negatively to his subsequent March budget, largely because Hunt did not include a reduction in VAT or business rates.

Fuller, Smith & Turner shares rose 0.6 per cent to 720p on Tuesday morning, meaning they have risen by a fifth in the past 12 months.