Allied Domecq profits warning rocks market
Wednesday 13 January 1999
The group, whose interests span Beefeater gin, Baskin Robbins ice cream and the Big Steak pub chain, cited "eroding consumer confidence", which it said had intensified since last summer. It said the downturn was particular marked over the Christmas period with drinks sales falling, although food sales had held up.
The warning knocked 14 per cent per cent from Allied's share price, prompting a raft of profit downgrades from brokers and depressing share prices elsewhere in the pubs and brewing sector. Shares in Bass and Scottish & Newcastle fell sharply, while Whitbread closed lower ahead of a trading update today.
"What we are seeing is some of the dark side of the change of pubs into places to have a meal," said John Wakeley, analyst at Lehman Brothers. "Restaurants are much more cyclically sensitive... and clearly a large part of the UK is suffering in terms of consumer confidence."
There was more bad news elsewhere in the sector, where the Old English Pub company announced that it had become a corporate victim of the flu outbreak sweeping Britain. The group, which operates "rustic" inns with accommodation, partly blamed the outbreak for a 2.9 per cent fall in like- for-like sales over Christmas. "We were hit by the epidemic, which resulted in several cancellations over Christmas and New Year," the company said. Trading was also affected by a move away from alcoholic beverages towards soft drinks, it said. Corporate bookings were down over the extended holiday period.
The Allied warning rocked a sector which had appeared to be recovering after upbeat statements last week from pub groups JD Wetherspoon and Yates Brothers Wine Lodges.
Allied's pubs operate under brand names such as Firkin, Scruffy Murphy's, Mr Q's and Big Steak. The group said food sales had held up well in pubs such as the Big Steak outlets, but drinks sales had weakened and customer numbers fallen. The company said: "Early evidence shows that our performance has mirrored the market trend in the pre-Christmas months. Sales were lower over the Christmas period, and first-half pub profits will therefore be lower as a result."
There was better news in spirits, where Allied said there had been some growth in major markets in the first four months of its financial year. In Europe, Ballantines scotch whisky volumes grew strongly and Beefeater gin did well. Trading in Mexico has been difficult due to duty rises, illegal bottling and tough economic conditions.
The group defended its decision to sell Cantrell & Cochrane, its Irish cider and soft drinks business, which was sold to BC Partners Venture Capital for pounds 519m.
Allied, whose talks with Seagram of Canada to create a wine and spirits alliance foundered last year, further hinted that talks between the two - and others in the industry - could be revived.
"There is little doubt in our minds that a combination with another group, with the right management team, would undoubtedly result in substantial synergies," said Sir Christopher Hogg, the chairman.
- 1 Malaysian cyclist could face disciplinary action after 'Save Gaza' gloves protest
- 2 Is Gideon Levy the most hated man in Israel or just the most heroic?
- 3 McDonald’s removes chicken nuggets from the menu in Hong Kong amid major food scare
- 4 Students offered grants if they tweet pro-Israeli propaganda
- 5 Satellite full of sexually experimental geckos adrift in space, Russia loses control of mission
Israel-Gaza conflict: Israeli targeting policy under scrutiny after shellfire hits a mother and child, a school full of refugees and a doctor’s home
Iraq crisis: Isis orders Mosul shop keepers to cover mannequins
Comic Con 2014 attendees
Students offered grants if they tweet pro-Israeli propaganda
McDonald’s removes chicken nuggets from the menu in Hong Kong amid major food scare
Malaysia Airlines MH17 crash: Vladimir Putin is given 'one last chance' to end hostilities in Ukraine
The 'scroungers’ fight back: The welfare claimants battling to alter stereotypes
The truth about conspiracy theories is that some require considering
Arizona execution lasts two hours as killer Joseph Wood left 'snorting and gasping' for air
Malaysia Airlines MH17 crash: Ukrainian military jet was flying close to passenger plane before it was shot down, says Russian officer
Malaysia Airlines MH17 crash: Massive rise in sale of British arms to Russia
iJobs Money & Business
£600 - £650 per day: Orgtel: Conduct Risk Liaison Manager - Banking - London -...
£18000 - £23000 per annum + Comission: SThree: SThree, International Recruitme...
£280 - £300 per day + competitive: Orgtel: Test Analyst, Edinburgh, Credit Ris...
£20000 - £25000 per annum + OTE £40,000: SThree: SThree Group have been well e...