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Fri 2nd Jun 2017 - Update: Fuller’s and Revolution Bars Group
Analyst Douglas Jack increases price target for Fuller’s: Peel Hunt leisure analyst Douglas Jack has increased his share price target for Fuller’s ahead of the company’s results next week. He said: “On 9 June, we will receive the results from the General Election and Fuller Smith & Turner. In an uncertain world, the latter should deliver a strong set of results, and continue its track record for setting and exceeding deliverable objectives. If the General Election fails to bring a similar result, we believe Fuller’s should be a safer (investment) home than most. We are increasing our target price to 1,200p from 1,100p. Fuller’s managed pub/hotel like-for-like sales rose by 3.7% (vs 5.3% comp) during the 43 weeks to 21 January 2017. This was ahead of the Coffer Peach Business Tracker, which was up 0.7% for managed pubs (1.8% in London; 0.4% outside London) over the same period. Managed pub market like-for-like sales picked up to 2.4% (4.5% in London; 1.8% outside) in February-April 2017, during which we expect Fuller’s outperformance to have continued. At our 30 March conference one of the main themes was demand gravitating to premium products, to which Fuller’s is well-positioned. Indeed, the company is extending its premium product range, whilst continuing to invest in amenity and service levels. Thus, at the conference, the company stated that it was not experiencing any weakness in consumer behaviour and that it expects to grow managed margins over the long term. Our forecasts assume that Fuller’s adds two outlets in H2 2017E, which requires no new sites, over the last four months, following three pub openings, four The Stable openings and two transfers during the first eight months. Tenanted like-for-like profits fell by 1% during the first 43 weeks and are forecast to fall by 0.5% over the full year, excluding the benefit of 18 tail-end pub disposals, boosting average pub profitability by 4-5% eventually. Our forecasts assume minimal change in brewery division trends, albeit with Nectar Imports boosting sales and diluting margins in the short term. Managed pubs, restaurants and hotels, which now generate over 60% of group profit, are Fuller’s greatest source of growth and potential upgrades. We believe the upside risk rests in the assumption of 2% like-for-like sales in 2018E (versus our 4% forecast for 2017E). Our forecasts assume a slowdown in expansion (caused by a pause at Stable Pizza) even though the company has the balance sheet (2.9x net debt/Ebitda) and the ambition to be more expansive.”

Revolution hires Mike Foster as chief financial officer: The board of Revolution Bars Group has announced that, following a period as interim finance director, Mike Foster has been appointed as chief financial officer and to the board with immediate effect. The company said: “He brings much experience in large multi-site retail and leisure businesses, including the last 20 years in major pub and bar companies. Most recently, he was chief financial officer of Intertain Limited. Prior to that, he was chief financial officer of Regent Inns from 2005 and held several senior accounting roles at Spirit Group (formerly with Scottish & Newcastle Retail), Esporta and First Leisure Corporation.” Foster Mike is a chartered accountant (FCA). Chairman Keith Edelman, said: “We are delighted that Mike has decided to join on a permanent basis. We are already benefitting from his leisure sector experience and he has fitted in with the team well.”

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