Pub giant Marston’s (GB:MARS) issued a trading update for the year with higher retail sales and “encouraging” customer demand as Britons flocked back to pubs post-pandemic.
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The company’s annual retail sales increased by 2% as compared to fiscal year 2019 levels.
The company also reported that sales in the last two months were 3% higher than in 2019 and 4% higher than the previous year’s numbers.
The positive numbers were driven by higher footfalls in pubs after the restrictions were completely lifted. The company’s strategy of picking community-based locations for its pubs has also worked in its favour.
The company, which has around 1500 pubs and bars, stated that the sales were mainly driven by drink sales as compared to food items. Food sales were slightly on the low side due to the extremely hot summer season.
After recovering from the pandemic, restaurants and pubs in the UK are now facing higher input costs from inflation. However, Marston’s has fixed its gas bills until March 2025 and hedged its energy rates for this winter season.
Therefore, the company’s food and drink costs are in line with the previous guidance with no additional spending expected.
Marston’s chief executive, Andrew Andrea, commented, “The level of customer demand we are experiencing is encouraging, which underpins our confidence that our strategy is working, and we are making positive progress in that regard. Looking forward, we are primed to maximise the trading opportunities provided by the forthcoming World Cup and first restriction-free Christmas in three years.”
Shares were trading up by around 4% this morning after the announcement. Overall, the stock has fallen 50% in the last year.
Are Marston’s shares a good buy?
According to TipRanks’ analyst consensus, Marston’s stock has a Moderate Buy rating, based on one Buy and two Hold recommendations.
The MARS price target is 54.5p, which has an upside potential of 47% on the current price level. The target price has a high forecast of 59p and a low forecast of 50p.
Outlook
The company’s trading numbers ahead of its annual results in November 2022 paint a positive picture for shareholders. Also, the company’s tight grip on managing costs will help strengthen its overall profitability.
