Fullers loses £22m in latest results

Pub and brewery group, Fullers has published its financial results for the 26 weeks to 26 September 2020, showing £22m in losses across the six months, and revenues diving to £46m.

Financial & Operational Indicators
• Mandated closure of the estate for 14 weeks of the 26 week trading period. Phased reopening from 4 July 2020 but 66% trading weeks lost in Managed business due to ongoing restrictions on consumer behaviour
• During the final two months, with the majority of the estate open, the Group made an operating profit of £2m despite severe restrictions in place
• Managed like-for-like sales outside of London were 92% of prior year. Overall like for like sales were 75% including transport hubs and Central London pubs
• Tight management of cash burn and recovery of working capital contributed to net debt only increasing by £9m to £187m
• Accessed £100m of commercial paper through the Covid Corporate Financing Facility
• Financing and liquidity position underpinned by strength of freehold portfolio

Strategy Update
• Successful trading from staycations in our hotels and pubs with rooms – particularly in popular tourist destinations – with occupancy levels of 79%, demonstrating the benefits of our balanced estate
• Utilised closure period to continue capex programme – ensuring our pubs and hotels are always in prime condition
• Completed the integration of Cotswold Inns & Hotels, which has delivered immediate benefits
• Concluded the Transitional Services Agreement with Asahi
• Opened The White Horse, Wembley – giving us a foothold in an iconic area that is
currently being redeveloped, and where we were underrepresented
• Accelerated planned implementation of new digital initiatives driven by early
identification of changes in consumer behaviour
• Streamlined central support and Managed Pubs and Hotels teams across the
business
• Long term strategy remains focused on providing outstanding food, drink and hospitality in well-invested, iconic locations.

Current Trading & Outlook
• All pubs temporarily closed due to second national lockdown from 5 November 2020 – with swift management action taken to achieve minimal stock losses
• 98% of team members on furlough or flexi-furlough
• Like for likes sales in our Managed Pubs and Hotels for the 34 weeks to 21 November
2020 at 69% of prior year
• Strong engagement with, and retention of, Tenants with commercial rent for our
Tenanted Inns again suspended while pubs are under enforced temporary closure
• Well-motivated and prepared teams throughout the business primed to deliver
exceptional customer service on reopening in COVID-secure pubs and hotels
• Structured reopening planned from 2 December 2020
• High consumer confidence in our premium pubs and hotels expected to lead to
strong demand as we reopen the estate in a safe and steady manner.

Chief Executive Simon Emeny said, “The imminent roll out of a vaccine is excellent news for the future. The tightening of the tier system will present further challenges over the winter months, but we welcome the Prime Minister’s comments that we will see the need for restrictions fall away in the spring. Without doubt, a return to normality is in sight.

“When the current lockdown was announced, we acted swiftly to implement the lessons learned last time round and this latest closure has been made with minimal stock losses. We also immediately placed 98% of our team members – across our pubs, hotels and in our support functions – on furlough or flexi-furlough, thereby minimising our cash burn.

'The extension of the Coronavirus Job Retention Scheme until March 2021 provides a degree of breathing space and will allow us to apply a sensible and measured approach to costs as we reopen our estate, particularly at the most affected sites in our city centres.'

Emeny continued, “We entered this crisis in a position of strength, buoyed by the sale of the Fuller’s Beer Business. We have used the time and space created by the pandemic wisely – completing targeted investments in our estate, rightsizing our teams and utilising the support available to manage our cash reserves where possible. It has not been easy, but prudent financial management, an estate that is 92% freehold, and a strong Balance Sheet mean that we will be in the best possible position to get back on a growth trajectory.

“We know our customers want to come back, we know they trust us to look after them and provide a safe and sensible environment to enjoy a great Fuller’s experience and, over and above this, we have a dedicated and passionate team of people with the ability and desire to delight, surprise and welcome back those customers.

“We are optimistic about the future in the medium term and beyond, but there is no doubt that this will be a tough winter and a very different looking Christmas. We will start to reopen our estate in a measured way, navigating the tier system and the restrictions that come with it.

'However, it is important that we see beyond these obstacles and look at the bigger picture. The excellent news of successful vaccines gives us confidence where previously there was uncertainty, and with the sensible decisions we have taken during the pandemic, Fuller’s is well-placed for future success.'

Emeny concluded, “This business is armed with a well-invested and well-balanced, freehold estate, excellent people, robust financial foundations, a clear and consistent strategy, and the drive and desire to lead the way out of this crisis. The long-term future for Fuller’s looks positive.”