Yesterday, Greenalls issued a trading statement which was a carbon copy of Bass' update. The main problem was that pubs trading in the North-west and the Midlands, the bulk of Greenalls' estate, slowed down sharply as the economy ground to a halt. Drinks sales were also hampered by the wet summer weather.
Overall, turnover grew by 6 per cent, but sales per outlet were a measly 1.8 per cent up. A pretty gloomy picture, and yet the shares fell only 1/2p to 303.5p.
Greenalls' saving grace was that Bass had said it all before and most analysts had downgraded the whole sector at the time. Given the sorry state of the pub market, the fact that Greenalls did not fare any worse than Bass was good enough to prop up the shares.
The performance of the hotels and leisure division, centred on the plush De Vere golf hotels and the Village Leisure chain of hotel-cum-fitness centres, was also heartening. Room yields grew in double digits despite some price pressure from the strong pound.
This division is the key to Greenalls' fortunes in the impending economic downturn. The company is banking on a reliable stream of earnings from De Vere and Village Leisure to counteract the inevitable fall in pub sales. To this end it is diverting more of its capital expenditure from pubs to hotels in an effort to boost its estate.
The risk is that if the economy does take a tumble, cash-strapped consumers will be likely to cut down on their expensive golf breaks, leaving Greenalls stranded.
The shares are now on around 7.5-times 1998 earnings forecast of around pounds 160m. At these bargain levels, they are worth holding.