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Tue 14th Jan 2014 - Breaking News - Spirit reports 7% rise in LfLs over Xmas
Spirit reports like-for-likes up 7% over Christmas: Spirit Pub Company has reported like-for-like sales up 7% over three Christmas weeks aided by the timing of holidays. Like-for-like net sales are up 4.3% in the 20 weeks to 4 January, with like-for-like food sales up 4.2% and drink sales up 3.9%. The company stated: “Our managed pubs have continued their strong start to the year with robust growth in both drink and food sales as our guests continue to respond positively to our brands and the experience we deliver. We continue to perform ahead of the market. Christmas trading, aided by the timing of the holidays, was very encouraging with like-for-like net sales up 7.0% (in the three weeks to 4 January 2014). Work continues to identify potential pubs to add to our estate and we expect to begin acquiring pubs in the second half of the current financial year.” Leased division like-for-like net turnover was up 2.2% and like-for-like net income was up 1.2% in the 20 weeks to 4 January. The company added: “We remain pleased with the progress in our leased estate where like-for-like net income has stabilised, returning to growth in recent trading. Our focus remains on further improving the quality of our estate through investment in our properties and licensees, innovation and selective disposals. On 4 November 2013, Spirit successfully completed a debt re-profiling exercise, which, via a smoother amortisation profile, provides the business with the financial flexibility to continue to invest and grow. We note that on 30 October 2013 the Court of Appeal issued its judgement in The Rank Group plc case, regarding the VAT treatment of the income from certain slot machines, in favour of HMRC although Rank have sought leave from the Supreme Court to appeal the decision. As at 17 August 2013, Spirit disclosed a net contingent liability of £18.9m in respect of this claim.” Chief executive Mike Tye said: “We are pleased to report strong trading across the business for the first 20 weeks of our financial year with trading particularly buoyant over the Christmas period. Our focus remains on the execution of our well defined strategy which has seen our Managed pubs consistently perform ahead of the market and enabled our Leased estate to return to like-for-like growth during the period. We intend to build on this encouraging start by continuing to enhance the experience for all our guests, further strengthening the appeal of our brands and pubs and beginning to expand our estate.” Numis Securities leisure analyst Douglas Jack said: “Managed pub like-for-like sales have strengthened to 4.3% from 4.0% and Leased LFL EBITDA has improved to 1.2% from -0.3% over the 12 weeks to 4 January. Ongoing operational progress and easy comps should support LFL trading in Q2 and Q3, ahead of tougher comps in Q4. We are holding our forecasts, but believe forecast risk is on the upside. We are increasing our target price to 110p from 100p. Despite a strong track record that includes growing average managed pub EBITDA by 37% over the last three years, Spirit still has the lowest EV/EBITDAR valuation in the sub-sector. We would buy for the growth and for another potential re-rating.”
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