Regent Inns, the pub operator that owns high street brands such as Walkabout and Bar Risa/Jongleurs, will update investors on how well it has performed in the first half of the year next week, and early indications are not too promising.
The company has already said that it expects its full-year results to be slightly below the market expectation at the time. Trading conditions in the high street pub business have taken its toll on the company.
Competitors such as JD Wetherspoon, Slug & Lettuce owner SFI and Wolverhampton & Dudley have all shown signs of an adverse market and have been struggling, while smaller companies, such as Old Monk, are falling into administration.
This problem has been intensified by a price discounting war between major pub operators as they look to grab customers in the short term.
Regent has so far steadfastly refused to join this war, instead looking to focus on the long-term strength of its brands. This, however, has resulted in a 3.2% fall in sales compared to last year, although it said operating margins were continuing to grow at its established sites.
These tough times have meant challenging conditions for financial director Simon Rowe.
The chain sold off 57 freehold outlets last year and now holds only 11 unbranded sites, which have performed even worse than the company’s chain sites. These sites will eventually be converted into either Walkabout, Bar Risa/Jongleurs or third brand PALs sites, but the company is scaling back its ambitious expansion programme due to the adverse market conditions.
Although it did open several new sites at the end of last year, only three further openings are planned for the remainder of the financial year and a similar number for the year after.
By the end of this year the business expects to be operating 42 Walkabouts, 15 Bar Risa/Jongleurs and three PALs.
Analysts have cut forecasts of pre-tax profits for the current year by about £1m to around £14.5m. The company’s share price is currently trading at around 56p – down massively from a high of 181.5p just under a year ago.