Fuller's sales continue recovery as energy costs soar

20th Sep 2022 07:17

(Sharecast News) - Pub operator Fuller, Smith & Turner said it was continuing to rebuild its sales post-pandemic on Tuesday, with total sales in the first 25 weeks of its financial year up 3% against pre-Covid levels, and up 50% on the same period last year.

The company said in a trading update that on a like-for-like basis, sales for the 25 weeks ended 17 September were ahead 21% compared to last year.

Looking at its costs, Fullers said the global energy crisis was causing "significant" increases to its expected costs for gas and electricity for the current financial year.

"Earlier in the year we had forward purchase contracts in place to cover 50% of our forecast annual gas and electricity requirements," the board said in its statement.

"More recently the energy markets have seen costs increase even further to unprecedented levels.

"With growing uncertainty, and the risk of even higher market costs for energy as we head into the winter months, we have purchased additional forward contracts to cover what we anticipate will be our annual requirement, providing surety for the months ahead."

Fullers noted that on 8 September, the government announced a new six-month scheme to offer support to businesses at a similar level to that offered to household consumers.

As the details were yet to be published, the board said it did not know, and was unable to quantify, the extent to which the scheme would mitigate its increased costs.

Before any financial benefit from the scheme, the firm said it expected its total gas and electricity costs in the current year to be around £18m, against a prior year figure of £8m.

Fuller's said it had made "good progress" implementing a number of initiatives, with more to follow, to reduce its energy usage and help mitigate the cost increases over the medium term.

During the first half, the company opened The Queen's Arms - a landside pub at Heathrow Terminal 2, with the board adding that it was close to completion on two further sites.

In the year to date it had sold four non-core unlicensed premises, generating proceeds of £6.9m, with the board planning to use part of those proceeds to fund a repurchase of up to one million 'A' shares.

"While sales continue to recover from the effects of the pandemic, we are conscious that consumers face increasingly challenging times ahead," said chief executive officer Simon Emeny.

"Businesses across the hospitality sector are experiencing unsustainable increases in energy costs.

"Despite having proactively purchased forward contracts to limit the impact on Fuller's, we will see significant increases this year and do urge the government to provide much needed clarity on its proposed support package so that we can plan accordingly."

Emeny said the company was "looking forward" to the upcoming World Cup, and its first "restriction-free" Christmas for three years.

"The future may present more obstacles to navigate, but Fuller's is a long-term company with a clear vision and the people, properties, and financial firepower to deliver consistent returns in the long term."

Fuller's said it would next update the market on 17 November, when it issues its half-year results for the 26 weeks to 24 September.

At 0836 BST, shares in Fuller, Smith & Turner were up 0.79% at 512p.

Reporting by Josh White at Sharecast.com.