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Wed 6th Nov 2013 - Breaking News - Tim Martin: "Bramwell is a busted flush"
Tim Martin – “we have no interest in Bramwell, it’s a busted flush”: JD Wetherspoon founder Tim Martin has told Propel that the company has no interest in buying packages of Bramwell Pub Company sites – although the odd one or two sites might be of interest. He told Propel: “I think they are best converted to restaurants and shops. Most of them opened unusually close to us. There’s been two or three reincarnations of Barracuda Pub Company and I think it’s a busted flush.” Asked about whether the decision to ramp up new openings from 30 to 50 this year reflected increased optimism at the company, Martin said: “It’s hard to be precise about levels of optimism, We feel we can open 50 and it’s a financial issue - we extended our banking facility by £100m the other day.” Martin said the move to extend food service times by an hour to 11pm is making a slow start. “The anecdotal evidence is that we are serving three or four meals in the extra in some pubs. It’s in the nature of an investment for the future – I doubt if it will be immediately profitable.” In the wake of First Quarter results, Numis Securities leisure analyst Douglas Jack has maintained his Wetherspoon earnings forecast as faster expansion is evened out by margin erosion – he maintained an “Add” recommendation with a 815p price target. He said: “Wetherspoon now anticipates opening 40-50 pubs this year, up from previous guidance of 30 and last year’s 29 openings, helped by a number of recent acquisitions. Guidance on 2015 and 2016 expansion is unchanged at 30 openings per annum. Reflecting the extra openings, we forecast 8.4% total sales growth this year versus Quarter One’s 7.6%. Margins fell 30bps to 8.3%, a disappointing outcome after the 41bps increase to 9.0% in the second half of (the last financial year). The company cited labour, repairs, marketing and central overheads. Overall cost inflation is 4% (food and drink 3%; utilities 5%; plus Machine Gaming Duty and pension enrolment), but is likely to be 3% after cost mitigation and offsetting the forthcoming benefit of maximum machine prizes rising to £100. Our Add recommendation reflects what we believe is a fair valuation and expectations of circa 15% earnings growth next year.” Simon French, of Panmure Gordon, issued a “Buy” note after the results announcement with a Target Price of 806p. He said: “Christmas Day falling on a Wednesday is about as good as it gets for the licensed retail trade so we expect continued good growth over Q2. We also expect the increase in Category C gaming machine prizes to £100 in January to drive machine revenue growth over the next 18 months. We expect the group to be a modest beneficiary of the FIFA World Cup at the end of its financial year.”
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