Greenalls on brink of shareholders' revolt

Greenalls, one of the largest pub groups in the UK, yesterday shocked the stock market with a profits warning. Andrew Yates finds that the group could face a shareholder revolt if it fails to reverse the recent sharp decline in its share price.

Institutional shareholders in Greenalls yesterday expressed concerns about the future direction of the group after it said that trading at its managed pub estate had been flat over the summer months.

Greenalls shares tumbled 37.5p to 414p as analysts rushed to downgrade pre-tax profit forecasts for the year to September by pounds 10m to around pounds 154m.

Greenalls shares have had a dreadful run, falling from a high of 633p last year and underperforming the stock market by almost 40 per cent over the past 12 months.

One leading drinks analyst said: "There could be real pressure on Greenalls' management from shareholders if they do not improve the group's performance soon.

"They seem to have taken their eye off the ball when they purchased Boddington and that is very worrying."

Another analyst said: "They should be achieving high single-figure growth a least in their managed pub chain like other in the industry. This trading statement came as a big shock."

Lord Daresbury, Greenalls chief executive, said: "We are disappointed with the pub results. Our managed pub trade has been sluggish since the start of the summer. Some of our secondary community pubs have underperformed and that is where we are focusing our efforts now."

Greenalls joined the FTSE 100 index after its acquisition of Boddington, the pub and hotel group, in November 1995. However the group, which has more than 2,200 pubs in its estate, was ejected from the FTSE just three months later and its share price has plummeted ever since.

Greenalls said it had suffered from not spending enough money improving its pub chain while it integrated the acquisition of Boddington. It lost trade to competitors who were busy pumping millions of pounds into their own estates.

Greenalls plans to accelerate its capital expenditure programme and has earmarked more than pounds 100m for its pubs this year, developing its branded chains such as Henry's Cafe Bar and Millers Kitchen.

Analysts point out, however, that the group has spent pounds 80m on its estate in the past 12 months and has got little to show for it.

"If this spending spree does not produce a decent return the group could face a shareholder revolt," said one analyst.

Greenalls also said trading in the North-west, where it has 50 per cent of its estate, continued to be very difficult. It has decided to transfer another 79 managed pubs to its franchised and tenanted estate in an attempt to reverse the poor performance at these sites.

Greenalls' chairman, Andrew Thomas, has also presided over a rapidly declining share price at Limelight, the troubled bathrooms and kitchens group that has been a disastrous performer since it floated last year.

Start your day with The Independent, sign up for daily news emails
Sport
Super BowlAfter Katy Perry madness it's back to The Independent's live coverage of Super Bowl 49!
News
See what Twitter had to say about the first half of the Super Bowl
News
people
News
people
PROMOTED VIDEO
ebooks
ebooksA special investigation by Andy McSmith
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Software Development Manager

£40000 - £50000 per annum: Recruitment Genius: This is an exciting opportunity...

Ashdown Group: Product Manager - (Product Marketing, Financial Services)

£30000 - £35000 per annum + Benefits: Ashdown Group: Marketing Manager - Marke...

Recruitment Genius: Compliance Assistant

£13000 per annum: Recruitment Genius: This Pension Specialist was established ...

Ashdown Group: Market Research Executive

£23000 - £26000 per annum + Benefits: Ashdown Group: Market Research Executive...

Day In a Page

The super-rich now live in their own Elysium - they breathe better air, and eat better food, when they're not making beans on toast for their kids

The super-rich now live in their own Elysium

They breathe better air, eat better food, take better medicine
A generation of dropouts failed by colleges

Dropout generation failed by colleges

£800m a year wasted on students who quit courses before they graduate
Entering civilian life 'can be like going into the jungle' for returning soldiers

Homeless Veterans appeal

Entering civilian life can be like going into the jungle
Sam Taylor-Johnson: Woman on top

Sam Taylor-Johnson: Woman on top

Fifty Shades of Grey director on bringing the hit to the screen
As in 1942, Germany must show restraint over Greece

As in 1942, Germany must show restraint over Greece

Mussolini tried to warn his ally of the danger of bringing the country to its knees. So should we, says Patrick Cockburn
Britain's widening poverty gap should be causing outrage at the start of the election campaign

The short stroll that should be our walk of shame

Courting the global elite has failed to benefit Britain, as the vast disparity in wealth on display in the capital shows
Homeless Veterans appeal: The rise of the working poor: when having a job cannot prevent poverty

Homeless Veterans appeal

The rise of the working poor: when having a job cannot prevent poverty
Prince Charles the saviour of the nation? A new book highlights concerns about how political he will be when he eventually becomes king

Prince Charles the saviour of the nation?

A new book highlights concerns about how political he will be when he eventually becomes king
How books can defeat Isis: Patrick Cockburn was able to update his agenda-setting 'The Rise of Islamic State' while under attack in Baghdad

How books can defeat Isis

Patrick Cockburn was able to update his agenda-setting 'The Rise of Islamic State' while under attack in Baghdad
Judith Hackitt: The myths of elf 'n' safety

Judith Hackitt: The myths of elf 'n' safety

She may be in charge of minimising our risks of injury, but the chair of the Health and Safety Executive still wants children to be able to hurt themselves
The open loathing between Barack Obama and Benjamin Netanyahu just got worse

The open loathing between Obama and Netanyahu just got worse

The Israeli PM's relationship with the Obama has always been chilly, but going over the President's head on Iran will do him no favours, says Rupert Cornwell
French chefs get 'le huff' as nation slips down global cuisine rankings

French chefs get 'le huff' as nation slips down global cuisine rankings

Fury at British best restaurants survey sees French magazine produce a rival list
Star choreographer Matthew Bourne gives young carers a chance to perform at Sadler's Wells

Young carers to make dance debut

What happened when superstar choreographer Matthew Bourne encouraged 27 teenage carers to think about themselves for once?
Design Council's 70th anniversary: Four of the most intriguing prototypes from Ones to Watch

Design Council's 70th anniversary

Four of the most intriguing prototypes from Ones to Watch