UPDATE: Fuller, Smith & Turner: Sunshine Boosts Start To FY11

23rd Jul 2010 10:39

(Adds detail, analysts' comments.) By Hannah Benjamin Of DOW JONES NEWSWIRES LONDON (Dow Jones)--Pub and brewery group Fuller, Smith & Turner PLC (FSTA.LN) Friday announced a solid start to the 2011 fiscal year, as people flocked to its beer gardens to enjoy a drink and food outside in the sunshine. The firm said sales at its managed pubs and hotels open more than a year rose 4.1% in the 16 weeks to July 17, with comparable profits at its tenanted pubs climbing 1%. Sales of its own-brewed beer fell 2%. "After some glorious summer weather there are economic clouds on the horizon, but I am confident that our strategy ensures the company is well placed to deliver for its shareholders even in these continuing uncertain times," Chairman Michael Turner said in the company's statement. Fuller's pubs are largely based in and around London. Many are located near to canals or rivers and often have large beer gardens. The strong performance is an improvement on the 2.7% growth in comparable sales at its managed pubs and hotels over fiscal 2010 as a whole and also an increase on the 3.5% growth the group announced for the first 10 weeks of the current fiscal. "This performance is certainly amongst the best in the sector and demonstrates the attractions of the London and South-East biased estate which has been further boosted by a decent run of good weather," Altium Securities analysts Greg Feehely and Wayne Brown told clients in a note Friday. Seymour Pierce analyst Hugh-Guy Lorriman said Fuller's comparable sales figures are "excellent." He has already upgraded his full-year forecasts twice in recent months but said further upgrades are likely if the strong momentum continues. "Backed by a very strong balance sheet Fuller's is in a win-win position," he told clients in a note Friday. Lorriman rates Fuller's "buy" and has a 675 pence price target on the stock. In spite of the very strong start to fiscal 2011, the company remains cautious about the broader economic outlook and last month warned that looming tax hikes could hit spending in its pubs this year. "The group's comments regarding the economy are understandable but it is better placed than most to survive and prosper," Langton Capital analyst Mark Brumby told clients. He said most other pub groups "would give their eye teeth to be able to report numbers such as these." Fuller's reported strong cash generation in the period, with net debt at the end of the first quarter, or June 26, down to GBP102 million from GBP107.7 million at March 27. The company has also promoted Simon Emeny, Managing Director of Fuller's Inns, to Group Managing Director. He starts his new role on Nov. 1 and will assume overall responsibility for the company's operations, with both The Fuller's Beer Company and Fuller's Inns reporting to him. -By Hannah Benjamin, Dow Jones Newswires; 44-20-7842-9298; [email protected] (END) Dow Jones Newswires July 23, 2010 05:39 ET (09:39 GMT)