Marston's Pubs squeezed by cost inflation as sales slow

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Pub Chain Lowers Price Of Beer To 99p A Pint
CEO Ralph Findlay said costs were rising in several different areas (Source: Marston's)

The boss of Marston's Pubs has said the chain will need to see consistent sales growth to keep up with rising costs.

Chief executive Ralph Findlay told City A.M. the group was doing everything it could to keep costs down for consumers, but that it could not commit to maintaining prices.

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"We'll work hard to minimise what we pass on to consumers," he said. "We can never commit to not increasing costs, but we have to be careful of doing that because in this market value for money is very important."

Findlay pointed to food prices, business rates, energy prices and beer duty as examples of increasing costs for the business. But, he added, Marston's is "well-hedged" for most costs.

To cover cost increases, Findlay said the group would need to see two per cent like-for-like sales in order to cover cost increases.

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Marston's released a 42-week trading update today showing results slightly below that target at 1.3 per cent growth for the full period. The most recent 12 weeks saw sales up 0.6 per cent.

In contrast with rival Young's, which said earlier this month that the hot weather had driven more people to the pub, Marston's saw a slowdown due to the warm weather. The company operates a large number of food-led pub-restaurants like Carvery and Rotisserie, which contribute more to the business over all, but proved unpopular with Brits as they chose a cold beer in the sun instead.

However, the chain has just finished integrating the Charles Wells brewing and beer business. The acquisition, which was completed in early June, is expected to create synergies of £4m by 2019.

Shares fell three per cent today to 117.6p.

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