Shepherd Neame, the brewer which operates 299 pubs in Kent and the South East, has issued an update on trading this week following the close of its financial year on 25 June 2022.
Since the resumption of restriction-free trading, the Company has performed well with encouraging demand. Overall trading for the 52 weeks to 25 June 2022 has been in line with expectations.
Cash generation has been strong and net debt reduced to the lowest level since 2018. The Company has emerged from the pandemic strongly and is actively pursuing opportunities again to invest and grow.
Retail sales have been encouraging since our last update, with our coastal pubs and hotels, in particular, benefitting from their unique locations and great outside space. Our Central London pubs are still to see a full recovery but footfall is improving. Same outlet like-for-like retail sales for the 6 weeks to 25 June vs 2021 were up +13.0%. This compares directly with the period from which indoor trading was allowed again on 17 May 2021. Same outlet like-for-like retail sales for the 6 weeks to 25 June vs 2019 were down -4.1%.
Income levels in the tenanted estate have continued to rise versus 2021, although volumes are lower than pre-pandemic. Own beer volumes in all channels for the 6 weeks to 25 June vs 2021 were up +2.0%. Own beer volumes in all channels for the 6 weeks to 25 June vs 20192 were down -3.0%.
The inflationary environment is challenging, with high costs in utility, energy related products and in our supply chain. We have long term fixed price contracts in place for certain items, and are taking mitigating action in other areas, through menu management and price increases to soften the impact. We are also choosing to invest more in areas such as property, marketing and people development for the long term strength of the Company.
Net debt (excluding IFRS 16 lease liabilities) has reduced significantly in the last year with strong cashflow, tight cost control and reduction in capital projects. Since its peak in December 2020, total indebtedness has reduced from £96.5m to £75.3m, the lowest level since 2018.
Jonathon Swaine joined the Company as at 27 June 2022, as Managing Director, Pubs and was appointed to the Board on 28 June 2022.
Jonathan Neame, CEO of Shepherd Neame said:
“Since COVID restrictions have been lifted, we have been encouraged by levels of demand and are enjoying strong performance across our business. In spite of external economic headwinds, we remain optimistic that we will continue to see similar levels of demand across the summer.
We are very pleased to welcome Jonathon Swaine to the team at a time when we are recommencing investment in our pub estate.
We are mindful of the many challenges ahead, but the business and our team have demonstrated extraordinary levels of resilience in the last two years, and we have no doubt we have the skills and platform to find opportunities to grow and develop in the future.”