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.
Thursday 25 September 1997
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.
- 1 Alan Rickman admits editing 'terrible' script with friends in Pizza Hut behind backs of writers on Robin Hood: Prince of Thieves
- 2 Rarest Beanie Baby of them all could be sold for £62,500 on eBay
- 3 Professional big game hunter Ian Gibson crushed to death by elephant during hunt
- 4 Farmer told to tear down mock-Tudor castle after hiding construction behind hay bales
- 5 Rebecca Francis accuses Ricky Gervais of using 'influence' to target female hunters after receiving barrage of death threats
Migrants crossing the Mediterranean: Pope Francis joins calls for EU action on boat refugees
Yemen crisis: Meet the child soldiers who have forsaken books for Kalashnikovs
Alan Rickman admits editing 'terrible' script with friends in Pizza Hut behind backs of writers on Robin Hood: Prince of Thieves
Rarest Beanie Baby of them all could be sold for £62,500 on eBay
Isis in Afghanistan: Group claims responsibility for Jalalabad suicide bombing that killed 35
If I’m being racially abused I don’t need a stranger with a saviour complex to rescue me
The only black face in the Ukip manifesto is on the page about overseas aid
Ukip is the only main political party to not address LGBT rights in its manifesto
Food banks: One million Britons will soon be using them, according to Trussell Trust
Religion isn't growing, it is becoming vigorous in its demise, says philosopher AC Grayling
BBC election debate: The one photo that summed up the whole 90-minute leaders debate
iJobs Money & Business
£20000 - £25000 per annum + OTE £45,000: SThree: SThree Group have been well e...
£50000 - £667000 per annum + excellent benefits : Ashdown Group: IT Manager / ...
£13000 - £20000 per annum: Recruitment Genius: Scotland's leading life insuran...
£40000 - £45000 per annum + benefits : Ashdown Group: Training Programme Manag...