Newspaper article The Evening Standard (London, England)

Gloomy Brokers Add to the Pub Chains Misery

Newspaper article The Evening Standard (London, England)

Gloomy Brokers Add to the Pub Chains Misery

Article excerpt


THE lack of spare cash in drinkers pockets appears to be having a detri-mental effect on the UKs big pub chains, judging by the collapse in their share prices this year.

Today, two more City hotshots have added to the hangovers being suffered by investors and publicans the length and breadth of the country by down-grading their ratings in the face of fall-ing beer sales and squeezed profits.

Icelandic broker Landsbanki has cut Enterprise Inns, down 12p at 3023/4p, making it the biggest blue-chip faller, and Mitchells & Butlers, 73/4p firmer at 2871/2p, from hold to reduce, while rival Credit Suisse has started coverage of Enterprise and Punch Taverns, down 13/4p at 2821/2p, with an underper-form rating.

Credit Suisse also has a neutral rating for Mitchells & Butlers, while Lands-banki has moved regional brewers and pub chain operators Greene King, 2p dearer at 5301/2p, and Marstons, 33/4p cheaper at 1953/4p, from hold to reduce.

Enterprise trades just pennies above record lows and has slumped from a peak of 649p since the start of the year. But the pub chains generally have been in decline since before the start of the smoking ban in July last year. Moves by several of them to convert their portfo-lio of pubs into real estate investment trusts were thwarted by the credit crunch and, in the meantime, the super-markets have stepped up the pressure by offering cheap booze to consumers at prices the pubs could never hope to compete with. More and more cash-strapped drinkers are buying their booze from the local supermarket and staying at home, rather than pay at least ?3 a pint for their beer. Landsbanki believes that the household spending outlook in 2009 was not gloomy enough and we should not expect an early return to growth in the pubs sector. Credit is also concerned that profitability will continue to come under pressure during the next year due to a consumer slow-down and inflationary pressures. …

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